Ispat Inland Inc. reported net income of $41.7 million on sales revenue of $811.0 million for the fourth quarter, and record net income of $258.7 million on sales revenue of $3,157.6 million for the year 2004.

Fourth Quarter Results—Net income of $41.7 million compares with a loss of $21.4 million in the fourth quarter of 2003. Net income includes an after-tax charge of $13.4 million related to the early redemption of $227.5 million principal amount of the company's outstanding 9-3/4% Senior Secured Notes due in 2014.

Sales revenue of $811.0 million represents a 43% increase compared to $567.0 million in the fourth quarter of 2003. The average selling price, $631 per ton, reflects a 50% increase compared to $420 per ton in the fourth quarter of 2003, and a 2% ($13 per ton) increase as compared to the third quarter of 2004 despite selling a less rich mix of products.

Steel shipments of 1,285,100 tons reflect a 5% (65,900 tons) decrease compared to fourth quarter 2003 shipments of 1,351,000 tons. The decrease in shipments was due to softer demand, and the market lull was used to expedite outages originally planned in the first quarter of 2005.

The company generated an operating profit of $126.5 million, which compares to an operating loss of $1.1 million in the fourth quarter of 2003.

Full Year Results—Record net income of $258.7 million represents an increase of $311.3 million over the loss of $52.6 million reported in 2003. Net income includes an after-tax charge of $13.4 million related to the early redemption of $227.5 million principal amount of the Company's outstanding 9-3/4% Senior Secured Notes due in 2014; and an after-tax gain of $21.2 million due to reassessment of property taxes for the year 2002.

Sales revenue increased by 42% to $3,157.6 million in 2004 from $2,222.9 million in 2003. The average selling price per ton increased by 34% to $562 per ton in 2004 from $419 per ton in 2003, with the mix of products sold relatively unchanged across periods. Steel shipments of 5,614,100 tons reflect a 6% (314,400 tons) increase compared to 2003 shipments of 5,299,700.

The company reported record operating profit of $531.0 million, which compares to an operating loss of $10.3 million in 2003.

Comments—Commenting on the outstanding results, Ispat Inland's President and CEO, Lou Schorsch said, "The record earnings were the result of strong steel demand, higher average selling prices, and excellent operating performance. Our employees worked hard to maintain high levels of production to meet increased customer demand throughout the year, and in the process, we established new hot metal and slab production records in 2004."

Financial—The company's cash balance at December 31, 2004 was $80.7 million. With an additional $359.9 million of availability under two revolving credit facilities, total liquidity was approximately $441 million. The company utilized net cash of $154.5 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. Additionally, in December, the company received $256.0 million from the issuance of common stock to its parent company, Ispat Inland Holdings, Inc. The company used these proceeds, through an affiliate (Ispat Inland ULC) to redeem $227.5 million of the outstanding 9-3/4% Senior Secured Notes due 2014, at a redemption price of 109-3/4% of the outstanding principal being redeemed, plus accrued and unpaid interest. Finally, the company utilized cash generated in the fourth quarter to repay the balance of borrowings outstanding under its accounts receivable revolving credit facility.

For the year ended December 31, 2004, net cash inflows from operations totaled $219.8 million, which is net of pension contributions of $111.5 million. Included in 2004 net cash inflows from operations is the monetization, totaling $53.7 million, of a tolling deposit previously held by a supplier and recorded as an Other Asset on the company's balance sheet. As a result, the company received cash in the fourth quarter in lieu of lower tolling charges in future years. Cash inflows from operations for the year ended December 31, 2003 were $22.3 million, which included $125.5 million of pension contributions.

Changes in working capital, components of receivables, inventories and accounts payable, utilized cash of $239.6 million for the current period, including $61.9 million for increased receivables and $230.2 million for increased inventories, partially offset by increased payables of $52.5 million. In 2003, changes in working capital generated $117.5 million of cash, including $42.1 million for decreased receivables, $71.3 million for decreased inventories, and $4.1 million for increased payables.

Cash inflows from investing activities, which consist primarily of capital expenditures, offset by distributions from joint ventures, were $2.0 million for the current period, compared to cash outflows of $91.6 million for the year-ago period. Capital expenditures were $39.9 million for the current period compared to $111.3 million for the year-ago period. Net distributions from joint ventures were $40.8 million and $19.1 million in 2004 and 2003, respectively.

Outlook—The company expects first quarter 2005 shipments to be higher than the fourth quarter shipments of 2004 which were impacted by weaker market conditions. The Company also anticipates higher selling prices mitigating higher raw material input costs. The combination of higher shipments and relatively stable margins should enable the Company to generate improved operating earnings as compared to the fourth quarter of 2004.

Pending Merger—In October 2004, Mittal Steel Co. NV announced that its board of directors had approved a transaction pursuant to which International Steel Group will be merged with a wholly owned subsidiary of Mittal Steel. An early termination of the waiting period under the Hart-Scott-Rodino Act was received in December 2004. The merger is subject to shareholder approval and to other customary closing conditions and is expected to be completed by the end of March 2005.

Ispat Inland Inc. is a subsidiary of Mittal Steel Co. NV, the world's most global steel company. Formed from the combination of Ispat International NV and LNM Holdings NV, Mittal Steel has operations in fourteen countries, on four continents. Mittal Steel encompasses all aspects of modern steelmaking to produce a comprehensive portfolio of both flat and long steel products to meet a wide range of customer needs. It serves all of the major steel consuming sectors including automotive, appliance, machinery and construction.