Stelco Inc. has issued preliminary unaudited operating results for the fourth quarter and year 2004, as well as commentary on estimated 2005 results. The company cautions that the estimates are unaudited and do not include possible adjustments to operating earnings that may be required as a result of the capital raising and sales process, the claims reconciliation process or other matters that may arise prior to finalization of Stelco's 2004 financial statements.

Fourth Quarter (Unaudited) Results—Stelco estimates fourth quarter 2004 operating earnings to be in the range of $45 to $50 million, compared to operating earnings of $102 million in the third quarter of 2004 and an operating loss of $138 million for the fourth quarter of 2003. The 2003 operating loss includes an $87 million charge for the write-down of the plate mill assets, however, no asset write-down charge has been recorded in the estimated fourth quarter 2004 financial information.

Lower operating earnings are primarily the result of increased repairs and maintenance spending during planned shutdowns of a number of facilities and the associated reduction in output at these facilities. In addition, input costs were higher compared to the third quarter of 2004, principally for coal, coke and scrap.

Net sales are estimated to be $914 million on shipments of 1,156,000 tons, compared to third quarter 2004 net sales of $953 million on shipments of 1,190,000 tons and fourth quarter 2003 net sales of $697 million on shipments of 1,273,000 tons.

Full Year (Unaudited) Results—Operating earnings for the year 2004 are estimated to be in the range of $223 to $228 million compared to an operating loss of $313 million for 2003. The 2003 operating loss includes an $87 million charge for the write-down of the plate mill assets, however, no asset write-down charge has been recorded in the estimated fourth quarter 2004 financial information.

Net sales are estimated at $3,525 million on shipments of 4,870,000 tons compared to 2003 net sales of $2,740 million on shipments of 4,902,000 tons.

Note—Stelco advises that operating earnings is a non-GAAP financial measure and as such does not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies. However, Stelco's published quarterly and annual financial statements do report operating earnings, separately disclosing key items of net sales, costs and expenses included therein. The corporation's published financial statements also disclose statement of earnings line items which the corporation does not include in operating earnings. Consistent with Stelco Inc.'s past practice, a reconciliation of earnings before income taxes (a GAAP financial measure) to operating earnings would include financial expenses, principally interest as well as reorganization expenses which are mainly expenses arising as a result of the CCAA process. The operating earnings measure is provided to assist users in analyzing operating profitability before non-operating expenses. Although the 2004 estimate of operating earnings is subject to change due to a number of factors cited above, the company has presented operating earnings without presenting net earnings as it believes that it is unable to provide a meaningful estimate of net earnings at this time.

Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, minimills, and manufactured products businesses.