Stelco Inc. released its 2004 Audited Consolidated Financial Statements together with Management's Discussion and Analysis, which outlines the corporation's financial results and condition. Stelco also released its Annual Information Form (AIF). In its statements, Stelco reported net earnings of $1 million for the fourth quarter, and net earnings of $65 million for the year ended December 31, 2004.

Fourth Quarter Results—Fourth quarter net earnings of $1 million ($0.01 per common share) compares to the fourth quarter 2003 restated net loss of $395 million ($3.89 per common share). Production of 1,329,000 semi-finished tons and shipments of 1,156,000 tons compares to the fourth quarter 2003, which reported the same level of production and had shipments of 1,273,000 tons.

In the fourth quarter of 2004 Stelco recorded an $18 million pre-tax charge to write off the carrying value of property, plant and equipment of Stelwire and Stelpipe as well as a $10 million future income tax valuation allowance. In the fourth quarter of 2003 the corporation recorded an $87 million pre-tax charge to write off the remaining book value of the plate mill assets and a $304 million future income tax valuation allowance.

Full Year Results—Net earnings of $65 million ($0.63 per common share) compare with a restated net loss of $564 million ($5.62 per common share) for the year ended December 31, 2003. As a result of an accounting policy change in 2004 related to asset retirement obligations, the 2003 financial statements have been restated as necessary to make them comparative to 2004. This change had a relatively minor impact on net earnings/losses in each year.

Cash generation for the year 2004 amounted to $19 million compared to cash usage of $114 million in 2003. The corporation's net short-term debt decreased from $192 million as at December 31, 2003 to $173 million as at December 31, 2004. Major elements of the 2004 cash generation included:

• $360 million generation from cash earnings before working capital changes.
• $251 million usage of cash through changes in working capital.
• $54 million usage for capital expenditures.
• $32 million usage for reduction of long-term debt not subject to compromise.

On December 31, 2004, net liquidity (generally, cash and cash equivalents plus available lines of credit, less lines of credit drawn down) was $287 million on a consolidated basis and $237 million for the CCAA Applicants.

Comments—Courtney Pratt, Stelco's President and CEO, said, "While our cash and financial positions have obviously improved during the past year, we had hoped for a more positive fourth quarter. As we indicated on March 8, 2005, the results for that period were adversely affected by repair and maintenance activity, the resulting impact on output and productivity, and the increased cost of such raw materials as coke, coal and scrap. Looking ahead, we anticipate a positive year in 2005 in terms of operating earnings and steel prices. As a consequence, the company is reaffirming its 2005 guidance issued on March 8, 2005. We remain focused on achieving the successful conclusion of our Court-supervised restructuring process in the coming months."

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.