UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended September 30, 2004
Or
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
UNITED STATES STEEL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware |
1-16811 |
25-1897152 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 600 Grant Street, Pittsburgh, PA |
15219-2800 | |
| (Address of principal executive offices) |
(Zip Code) |
| (412) 433-1121 |
| (Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No
Common stock outstanding at October 27, 2004 – 113,691,845 shares
UNITED STATES STEEL CORPORATION
FORM 10-Q
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
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| PART I - FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements: |
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| 6 | ||||||||||
| Item 2. |
Management’s Discussion and Analysis of |
29 | ||||||||
| Item 3. |
46 | |||||||||
| Item 4. |
47 | |||||||||
| 48 | ||||||||||
| PART II - OTHER INFORMATION |
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| Item 1. |
49 | |||||||||
| Item 6. |
55 | |||||||||
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PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
| Third Quarter Ended September 30, |
Nine Months Ended September 30, |
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| (Dollars in millions) | 2004 | 2003 | 2004 | 2003 | ||||||||||||
| Revenues and other income: |
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| Revenues |
$ | 3,460 | $ | 2,267 | $ | 9,372 | $ | 5,993 | ||||||||
| Revenues from related parties |
247 | 239 | 707 | 722 | ||||||||||||
| Income (loss) from investees |
18 | (2 | ) | 37 | (10 | ) | ||||||||||
| Net gains on disposal of assets (Note 9) |
2 | 4 | 46 | 27 | ||||||||||||
| Other income (Note 10) |
2 | - | 14 | 45 | ||||||||||||
| Total revenues and other income |
3,729 | 2,508 | 10,176 | 6,777 | ||||||||||||
| Costs and expenses: |
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| Cost of revenues (excludes items shown below) |
2,967 | 2,294 | 8,335 | 6,117 | ||||||||||||
| Selling, general and administrative expenses |
172 | 150 | 521 | 421 | ||||||||||||
| Depreciation, depletion and amortization (Note 11) |
96 | 94 | 287 | 271 | ||||||||||||
| Restructuring charges (Note 12) |
- | 664 | - | 664 | ||||||||||||
| Total costs and expenses |
3,235 | 3,202 | 9,143 | 7,473 | ||||||||||||
| Income (loss) from operations |
494 | (694 | ) | 1,033 | (696 | ) | ||||||||||
| Net interest and other financial costs (Note 14) |
4 | 26 | 142 | 106 | ||||||||||||
| Income (loss) before income taxes, minority interests, extraordinary loss, and cumulative effects of changes in accounting principles |
490 | (720 | ) | 891 | (802 | ) | ||||||||||
| Income tax provision (benefit) (Note 15) |
126 | (366 | ) | 263 | (418 | ) | ||||||||||
| Minority interests |
10 | - | 19 | - | ||||||||||||
| Income (loss) before extraordinary loss and cumulative effects of changes in accounting principles |
354 | (354 | ) | 609 | (384 | ) | ||||||||||
| Extraordinary loss, net of tax (Note 3) |
- | - | - | (52 | ) | |||||||||||
| Cumulative effects of changes in accounting principles, net of tax (Note 6 and Note 19) |
- | - | 14 | (5 | ) | |||||||||||
| Net income (loss) |
354 | (354 | ) | 623 | (441 | ) | ||||||||||
| Dividends on preferred stock |
(4 | ) | (4 | ) | (13 | ) | (11 | ) | ||||||||
| Net income (loss) applicable to common stock | $ | 350 | $ | (358 | ) | $ | 610 | $ | (452 | ) | ||||||
The accompanying notes are an integral part of these financial statements.
2
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Continued)
(Unaudited)
| Third Quarter Ended September 30, |
Nine Months Ended September 30, |
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| (Dollars in millions, except per share amounts) | 2004 | 2003 | 2004 | 2003 | ||||||||||
| Income per common share (Note 16): |
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| Income (loss) before extraordinary loss and cumulative effects of changes in accounting principles: |
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| - Basic |
$ | 3.08 | $ | (3.47 | ) | $ | 5.36 | $ | (3.84 | ) | ||||
| - Diluted |
$ | 2.72 | $ | (3.47 | ) | $ | 4.76 | $ | (3.84 | ) | ||||
| Extraordinary loss, net of tax: |
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| - Basic |
$ | - | $ | - | $ | - | $ | (0.50 | ) | |||||
| - Diluted |
$ | - | $ | - | $ | - | $ | (0.50 | ) | |||||
| Cumulative effects of changes in accounting principles, net of tax: |
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| - Basic |
$ | - | $ | - | $ | 0.13 | $ | (0.05 | ) | |||||
| - Diluted |
$ | - | $ | - | $ | 0.11 | $ | (0.05 | ) | |||||
| Net income (loss): |
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| - Basic |
$ | 3.08 | $ | (3.47 | ) | $ | 5.49 | $ | (4.39 | ) | ||||
| - Diluted |
$ | 2.72 | $ | (3.47 | ) | $ | 4.87 | $ | (4.39 | ) | ||||
| Weighted average shares, in thousands: |
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| - Basic |
113,523 | 103,321 | 111,170 | 103,096 | ||||||||||
| - Diluted |
130,021 | 103,321 | 127,940 | 103,096 | ||||||||||
| Dividends paid per share | $0.05 | $0.05 | $0.15 | $0.15 | ||||||||||
| Pro forma amounts assuming FIN 46R change in accounting principle was applied retroactively: |
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| Income (loss) before extraordinary loss and cumulative effects of changes in accounting principles, as reported |
$ | 354 | $ | (354 | ) | $ | 609 | $ | (384 | ) | ||||
| FIN 46R pro forma effect (Note 19) |
- | 2 | - | 10 | ||||||||||
| Income (loss) before extraordinary loss and cumulative effects of changes in accounting principles, adjusted for FIN 46R |
$ | 354 | $ | (352 | ) | $ | 609 | $ | (374 | ) | ||||
| Per share adjusted: |
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| - Basic |
3.08 | (3.45 | ) | 5.36 | (3.75 | ) | ||||||||
| - Diluted |
2.72 | (3.45 | ) | 4.76 | (3.75 | ) | ||||||||
| Net income (loss) adjusted for FIN 46R |
354 | (352 | ) | 609 | (431 | ) | ||||||||
| Per share adjusted: |
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| - Basic |
3.08 | (3.45 | ) | 5.49 | (4.29 | ) | ||||||||
| - Diluted |
2.72 | (3.45 | ) | 4.87 | (4.29 | ) | ||||||||
The accompanying notes are an integral part of these financial statements.
3
UNITED STATES STEEL CORPORATION
BALANCE SHEET
| (Dollars in millions) | (Unaudited) September 30, |
December 31, 2003 |
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| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 1,062 | $ | 316 | ||||
| Receivables, less allowance of $130 and $129 (Note 19) |
1,560 | 1,075 | ||||||
| Receivables from related parties (Note 22) |
111 | 144 | ||||||
| Inventories (Note 17) |
1,251 | 1,283 | ||||||
| Deferred income tax benefits (Note 15) |
167 | 245 | ||||||
| Other current assets |
24 | 43 | ||||||
| Total current assets |
4,175 | 3,106 | ||||||
| Investments and long-term receivables, less allowance of $4 and $4 |
283 | 289 | ||||||
| Long-term receivable from related parties (Note 22) |
10 | 6 | ||||||
| Property, plant and equipment, less accumulated depreciation and depletion of $7,190 and $ 6,957 |
3,514 | 3,414 | ||||||
| Intangible pension asset |
440 | 440 | ||||||
| Other intangible assets, less amortization of $9 and $ 4 (Note 2) |
32 | 37 | ||||||
| Deferred income tax benefits (Note 15) |
185 | 365 | ||||||
| Other noncurrent assets |
156 | 180 | ||||||
| Total assets |
$ | 8,795 | $ | 7,837 | ||||
| Liabilities |
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| Current liabilities: |
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| Accounts payable |
$ | 1,261 | $ | 967 | ||||
| Accounts payable to related parties (Note 22) |
70 | 58 | ||||||
| Payroll and benefits payable |
670 | 649 | ||||||
| Accrued taxes (Note 15) |
332 | 360 | ||||||
| Accrued interest |
43 | 50 | ||||||
| Long-term debt due within one year (Note 18) |
73 | 43 | ||||||
| Total current liabilities |
2,449 | 2,127 | ||||||
| Long-term debt, less unamortized discount (Note 18) |
1,569 | 1,890 | ||||||
| Deferred income tax liabilities (Note 15) |
5 | 6 | ||||||
| Employee benefits |
2,384 | |||||||