Ispat Inland Inc. reported net income of $54.1 million on net sales of $771.9 million for the second quarter of 2004.

Second Quarter Results—Net income of $54.1 million represents an increase of $73.8 million over the loss of $19.7 million reported in the second quarter of 2003. Net sales of $771.9 million represent a 38% increase from $560.5 million in the second quarter of 2003.

Average selling price per ton increased 32% to $541 per ton in the second quarter of 2004 from $409 per ton in the second quarter of 2003 and was 16% higher than the $465 per ton realized in the first quarter of 2004. The increase in the average selling price was due to higher base prices, the industry's implementation of pricing surcharges designed to offset price escalation in key input commodities, and to continued strong demand for the company’s products. Additionally, a higher percentage of cold rolled, coated and bar products sold in the second quarter of 2004 contributed to the increase in the average selling price per ton as compared to the second quarter of 2003. Shipments of 1,426,100 tons represent an increase of 56,300 tons (+4%) from second quarter 2003 shipments of 1,369,800 tons.

The company reported an operating profit of $113.0 million, compared to an operating loss of $14.2 million in the second quarter of 2003. In the first quarter of 2004, the company generated an operating profit of $80.6 million, which included a pre-tax benefit of $35.0 million due to the reassessment of property taxes and a $4.0 million charge for a salaried workforce reduction.

Six Month Results—Net income of $95.8 million compares to a net loss of $4.9 million for the first six months of 2003. Net sales of $1,437.5 million compares to net sales of $1,114.4 million for the first six months of 2003.

Comments—"Our continued focus on maintaining high levels of production to meet strong demand for our products enabled us to substantially improve upon our first quarter operating results," said Lou Schorsch, President and CEO.

Financial Results—The company's cash balance at June 30, 2004 was $28.1 million and there was an additional $131.8 million of availability under two credit facilities, for total liquidity of approximately $160 million. For the six months ended June 30, 2004, the company generated net cash of $44.1 million from financing activities. On March 25, 2004, the company received $775.5 million of net proceeds from the issuance and sale of $800 million of Senior Secured Notes. These net proceeds were used to retire the entire balance outstanding of $661.5 million of Tranche B and Tranche C Loans under its credit agreement, and repay the entire balance outstanding of $105 million under its inventory revolving credit facility, with the remainder of the proceeds used to reduce the amount outstanding under its receivables revolving credit facility. On July 13, 2004, the company elected to repay a $15 million promissory note with a major supplier. The note was due on July 20, 2004, and carried a fixed interest rate of 10%.

For the six months ended June 30, 2004, net cash outflows from operations totaled $35.0 million, which is net of pension contributions of $67.3 million. Cash outflows from operations for the six months ended June 30, 2003 were $10.2 million, which included $54.5 million of pension contributions.

Changes in working capital, defined as the change in receivables, inventories and accounts payable, utilized cash of $176.1 million for the current period, including $113.9 million for increased receivables and $67.1 million for increased inventories. For the first six months of 2003, changes in working capital utilized $8.3 million of cash, including $35.5 million for increased inventories, partially offset by decreased receivables of $21.5 million.

Outlook—With a continuation of the strong demand for steel, and anticipated higher selling prices, the company expects the third quarter 2004 results to improve over the second quarter.

Ispat Inland's labor contract has been extended to August 15, 2004 by mutual agreement between the Company and the United Steelworkers of America (USWA). The original contract was scheduled to expire on July 31, 2004. "Our existing agreements provide for binding interest arbitration in the event of unresolved issues, with no interruption in operations," said Lou Schorsch. "However, we would prefer to reach a negotiated settlement, and I remain encouraged that we will do so." Discussions between the company and Union negotiators are ongoing.

Ispat Inland Inc., a subsidiary of Ispat International NV, manufactures a broad range of semifinished and finished flat and bar steel products. Ispat International NV is one of the leading steel companies in the world, with steelmaking facilities in six countries and shipments of 15.2 million tons in 2003. In addition to Ispat Inland in East Chicago, Ind., Ispat International has major steelmaking facilities in Canada, Mexico, Trinidad, France and Germany.

Ispat International is a member of the LNM Group, the world's second-largest and most global steel group, which also operates in Algeria, Czech Republic, Indonesia, Kazakhstan, Poland, Romania, and South Africa.