ArcelorMittal Reports Third Quarter 2008 Results.LUXEMBOURG -- Regulatory News: ArcelorMittal (referred to as "ArcelorMittal", or "the Company") (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : MT; Amsterdam: MT; Madrid: MTS (1) See Microsoft Transaction Server. (2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. ; Paris: MTP (1) (Message Transfer Part) See SS7. (2) (Media Transfer Protocol) A Microsoft enhancement to the picture transfer protocol (PTP), starting with Windows Media Player 10 in Windows XP. ; Brussels: MTBL MTBL Mean Time Between Data Loss ; Luxembourg: MT), the world's leading steel company, today announced results for the three and nine-month periods ended September 30, 2008. Highlights for the three months ended September 30, 2008: * Sales of $35.2 billion, up 38% compared with Q307 * EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 1, 2 of $8.6 billion, up 76% compared with Q307 * Net income of $3.8 billion, up 29% as compared with Q307 * Capital expenditures of $1.8 billion in Q308 * Total return to ArcelorMittal shareholders of $2.3 billion, of which $0.5 billion in cash dividends paid and $1.8 billion in share buy-backs * Base dividend to be maintained at $1.50 per share for 2009 Guidance * Q408 EBITDA guidance to be in the range of $2.5 - $3.0 billion * On track to deliver full year EBITDA of $24.2 - $24.7 billion compared with 2007 full year EBITDA of $19.4 billion The Company also announces initiatives in response to the current economic environment: * Adaptation of existing growth plan to reflect market conditions * Increased management gains target from $4 billion to $5 billion through additional selling, general and administrative (SG&A) savings over the next five years * Increase of temporary production cuts to accelerate inventory reduction * Targeting $10 billon bil·lon n. 1. An alloy of gold or silver with a greater proportion of another metal, such as copper, used in making coins. 2. An alloy of silver with a high percentage of copper, used in making medals and tokens. net debt3 reduction by end of 2009 to increase financial flexibility Commenting, Mr. Lakshmi N. Mittal, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , ArcelorMittal, said: "We have announced today strong results for the quarter with EBITDA of US$8.6 billion. Looking forward, we have also announced necessary and responsible measures to ensure we are well adapted to the current environment. Our focus remains on cost-leadership and service to customers. The current period of de-stocking requires that we make appropriate production cuts to seek to rebalance supply and demand, and we are also accelerating efforts to pay down debt. ArcelorMittal, with its diversified diversified (di·verˑ·s business model, strong cash-flow and cost leadership position, is well placed to weather the challenging economic environment we currently face. We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the industry's medium-term growth prospects, but it is appropriate to pause our growth strategy until we have a more settled economic outlook." Financial highlights (on the basis of IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System (4), amounts in US$ and Euros(5)): (In millions of US dollars except earnings per share and shipments data) [TABLE OMITTED] (In millions of Euros except earnings per share and shipments data) [TABLE OMITTED] THIRD QUARTER 2008 NEWS CONFERENCE (FOR MEDIA) ArcelorMittal management will host a news conference: [TABLE OMITTED] The news conference will be available via a live video webcast on www.arcelormittal.com. THIRD QUARTER 2008 EARNINGS ANALYST CONFERENCE CALL Additionally, ArcelorMittal management will host a conference call for members of the investment community to discuss the third quarter 2008 financial performance of ArcelorMittal at 9.30 am New York time / 2.30 pm London time / 3.30 pm CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr on Wednesday, November 5th 2008. The conference call will include a brief question and answer session with senior management. The conference call information is as follows: Dial in access numbers will be the following: [TABLE OMITTED] The presentation will be available via a live video webcast on www.arcelormittal.com Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "target" or similar expressions. Although ArcelorMittal's management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal's securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission (the "SEC") made or to be made by ArcelorMittal, including ArcelorMittal's Annual Report on Form 20-F for the year ended December 31, 2007 filed with the SEC. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. About ArcelorMittal ArcelorMittal is the world's leading steel company, with over 326,000 employees in more than 60 countries. ArcelorMittal is the leader in all major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies Captive supply is a term for that part of the supply that is not owned by a company but is used by the company to maximize its own profits often at the unknowing expense of those who actually own those supplies. of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the Company covers all of the key steel markets, from emerging to mature. Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite finite - compact resources. ArcelorMittal recognises that it has a significant responsibility to tackle the global climate change challenge; it takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combat climate change. In 2007, ArcelorMittal had revenues of $105.2 billion and crude steel production of 116 million tonnes, representing around 10 per cent of world steel output. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MTP), Brussels (MTBL), Luxembourg (MT) and on the Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more information about ArcelorMittal visit: www.arcelormittal.com ARCELORMITTAL THIRD QUARTER 2008 AND NINE MONTHS 2008 RESULTS ArcelorMittal, the world's leading steel company, today announced results for the three and nine month periods ended September 30, 2008. Results for three months ended September 30, 2008 versus three months ended June 30, 2008 and three months ended September 30, 2007 ArcelorMittal's net income for the three months ended September 30, 2008 was $3.8 billion, or $2.79 per share, as compared with net income of $5.8 billion, or $4.20 per share, for the three months ended June 30, 2008 and $3.0 billion or $2.10 per share, for the three months ended September 30, 2007. Sales for the three months ended September 30, 2008 were $35.2 billion as compared with sales of $37.8 billion for the three months ended June 30, 2008, and $25.5 billion for the three month ended September 30, 2007. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the three months ended September 30, 2008 was $5.5 billion, as compared with operating income of $6.6 billion for the three months ended June 30, 2008, and $3.9 billion for the three months ended September 30, 2007. During the third quarter of 2008, ArcelorMittal USA agreed to a new four-year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) post-employment benefits. This non-recurring expense is excluded from EBITDA. The additional cash outflow related to these benefits, as per the contract, is expected to amount to $25 million per quarter for the first four years. Furthermore, it was agreed to pay an additional $90 million upon signing of the contract. Total steel shipments for the three months ended September 30, 2008 were 25.6 million metric tonnes as compared with steel shipments of 29.8 million metric tonnes for the three months ended June 30, 2008 and steel shipments of 26.0 million metric tonnes for the three months ended September 30, 2007. Depreciation costs for the three months ended September 30, 2008 increased to $1.4 billion as compared with depreciation costs of $1.3 billion for the three months ended June 30, 2008, and depreciation costs of $1.0 billion for the three months ended September 30, 2007. The increase was primarily due to scope additions. Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. losses for the three months ended September 30, 2008 amounted to $60 million as compared to $108 million for the three months ended June 30, 2008, in each case relating primarily to reduction of goodwill8. Income from equity method investments and other income for the three months ended September 30, 2008 was $386 million as compared with income from equity method investments and other income of $552 million for the three months ended June 30, 2008, and $280 million for the three months ended September 30, 2007. Income from equity method investments and other income was lower in the third quarter 2008 than in the second quarter of 2008, primarily due to a decrease of dividend income from investments from $115 million in the second quarter to $8 million in the third quarter. Foreign exchange and other financing costs were higher at $287 million for the three months ended September 30, 2008 as compared to foreign exchange and other financing costs of $17 million for the three months ended June 30, 2008. Net interest expense, which includes bank fees, interest on loans and interest on pensions, increased to $529 million for the three months ended September 30, 2008 as compared to $444 million for the three months ended June 30, 2008, due to an increased level of borrowing (see "Liquidity and Capital Resources" below). Losses related to the fair value of derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. for the three months ended September 30, 2008 amounted to $107 million, as compared with $412 million of gains for the three months ended June 30, 2008. Income tax expense for the three months ended September 30, 2008 decreased to $695 million as compared with $933 million for the three months ended June 30, 2008. The effective tax rate for the three months ended September 30, 2008, was 14.1% as compared with 13.1% for the three months ended June 30, 2008. The income tax expense for the three months ended September 30, 2007 was $672 million, with an effective tax rate of 17.0%. Minority interest for the three months ended September 30, 2008 was $414 million as compared with $352 million for the three months ended June 30, 2008. The increase is due to higher income from ArcelorMittal South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. and ArcelorMittal Ostrava. Minority interest for the three months ended September 30, 2007 was $312 million. Analysis of segment operations for the three months ended September 30, 2008 as compared to the three months ended June 30, 2008 The results of operations by segment discussed below reflect the changes to ArcelorMittal's segmental segmental /seg·men·tal/ (seg-men´t'l) 1. pertaining to or forming a segment or a product of division, especially into serially arranged or nearly equal parts. 2. undergoing segmentation. reporting made effective January 1, 2008 in light of the new Group Management Board ("GMB GMB (in Britain) General, Municipal and Boilermakers (Trade Union) ") structure announced on April 21, 2008. The results of the analysis prior to January 1, 2008 have not been recast re·cast tr.v. re·cast, re·cast·ing, re·casts 1. To mold again: recast a bell. 2. to reflect these changes. Flat Carbon Americas As from January 1, 2008, ArcelorMittal Montreal and pipes and tubes businesses from ArcelorMittal Dofasco have been transferred to Long Carbon Americas and Europe. Total steel shipments in the Flat Carbon Americas segment were lower at 6.9 million metric tonnes for the three months ended September 30, 2008 as compared with steel shipments of 7.4 million metric tonnes for the three months ended June 30, 2008, or 7.1 million metric tonnes excluding the Sparrows Point Sparrows Point is an unincorporated area in Baltimore County, Maryland. It was named for Thomas Sparrow, landowner, and is adjacent to Dundalk, Maryland. It is the site of a very large industrial complex, now in decline, known in the past for steelmaking and shipbuilding. plant, which was sold effective May 7, 2008. Sales were higher at $8.5 billion for the three months ended September 30, 2008 as compared with sales of $7.5 billion for the three months ended June 30, 2008. Operating income9 was lower at $0.6 billion for the three months ended September 30, 2008 as compared with operating income of $1.4 billion for the three months ended June 30, 2008. Excluding the impact of the new labor agreement operating income was higher at $2.2 billion for the three months ended September 30, 2008 as compared with operating income of $1.4 billion for the three months ended June 30, 2008. Operating results for the three months ended September 30, 2008 as compared with the three months ended June 30, 2008 increased (excluding the effect of the new labor contract) primarily due to higher average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. on a comparable basis and partially offset by increased input costs and lower steel shipment volumes. Operating income for the three months ended September 30, 2008 was also negatively impacted by $58 million due to a reduction of goodwill. Operating income for the three months ended June 30, 2008 was negatively impacted by $158 million due to a reduction of goodwill. Flat Carbon Europe As from January 1, 2008, the operations of ArcelorMittal Annaba flat and Skopje previously reported in the AACIS AACIS American Association for Collegiate Independent Study (conference) segment have been transferred to the Flat Carbon Europe segment. In addition, the entire operations of Galati are reported within Flat Carbon Europe. Total steel shipments in the Flat Carbon Europe segment were lower at 8.2 million metric tonnes for the three months ended September 30, 2008 as compared with steel shipments of 9.9 million metric tonnes for the three months ended June 30, 2008. Sales were lower at $10.1 billion for the three months ended September 30, 2008 as compared with sales of $11.8 billion for the three months ended June 30, 2008. Operating income decreased to $1.3 billion for the three months ended September 30, 2008 as compared with operating income of $1.7 billion for the three months ended June 30, 2008. Operating results for the three months ended September 30, 2008 as compared with the three months ended June 30, 2008 decreased due to lower shipment volumes and higher input costs, partially offset by higher average selling prices. Long Carbon Americas and Europe As from January 1, 2008, the Long Carbon Americas and Europe segment includes the operations of ArcelorMittal Annaba long, Sonasid, Zenica, and the global pipes and tubes business, which were previously reported in the AACIS segment, and ArcelorMittal Montreal which were previously reported in the Flat Carbon Americas segment. The wire drawing businesses have been transferred to the Steel Solutions and Services segment. Total steel shipments in the Long Carbon Americas and Europe segment were lower at 6.7 million metric tonnes for the three months ended September 30, 2008 as compared with steel shipments of 8.1 million metric tonnes for the three months ended June 30, 2008. Sales were lower at $9.5 billion for the three months ended September 30, 2008 as compared with sales of $9.9 billion for the three months ended June 30, 2008. Operating income10 was higher at $1.8 billion for the three months ended September 30, 2008 as compared with operating income of $1.6 billion for the three months ended June 30, 2008. Excluding the impact of the new labor agreement, operating income was higher at $1.9 billion for the three months ended September 30, 2008 as compared with operating income of $1.6 billion for the three months ended June 30, 2008. Operating results for the three months ended September 30, 2008 as compared with the three months ended June 30, 2008 increased due to improved average steel selling prices partly offset by lower volumes and increased input prices. Asia Africa and CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S ("AACIS") As from January 1, 2008, the AACIS segment excludes the operations of ArcelorMittal Annaba, Sonasid, Zenica, Skopje and the pipes and tubes businesses that have been transferred to the respective segments as discussed above. Total steel shipments in the AACIS segment were lower at 3.3 million metric tonnes for the three months ended September 30, 2008 as compared with 3.9 million metric tonnes for the three months ended June 30, 2008. Sales were higher at $4.2 billion for the three months ended September 30, 2008 as compared with sales of $3.9 billion for the three months ended June 30, 2008. Operating income was higher at $1.5 billion for the three months ended September 30, 2008 as compared with operating income of $1.3 billion for the three months ended June 30, 2008. Operating results for three months ended September 30, 2008 were higher as compared to the three months ended June 30, 2008, due to improved average steel selling prices partly offset by lower volumes and increased input prices. Stainless Steel stainless steel: see steel. stainless steel Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. Total steel shipments in the Stainless Steel segment were lower at 487 thousand metric tonnes for the three months ended September 30, 2008 as compared with steel shipments of 578 thousand metric tonnes for the three months ended June 30, 2008. Sales decreased to $2.1 billion for the three months ended September 30, 2008 as compared with $2.6 billion for the three months ended June 30, 2008. Operating income was lower at $156 million for the three months ended September 30, 2008 as compared with operating income of $308 million for the three months ended June 30, 2008. Operating results for the three months ended September 30, 2008 were lower than the three months ended June 30, 2008, primarily due to lower volumes and margins. Steel Solutions and Services11 As from January 1, 2008, the operations of ArcelorMittal wire drawing activities which previously reported within the Long Carbon Americas and Europe segment have been transferred to the Steel Solutions and Services segment. Total steel shipments in the Steel Solutions and Services segment were lower at 4.3 million metric tonnes in the three months ended September 30, 2008 as compared with steel shipments of 5.7 million metric tonnes for the three months ended June 30, 2008. Sales in the Steel Solutions and Services segment were lower at $6.1 billion for the three months ended September 30, 2008 as compared with sales of $7.1 billion for the three months ended June 30, 2008. Operating income was higher at $343 million for the three months ended September 30, 2008 as compared with operating income of $285 million for three months ended June 30, 2008, due primarily to higher average steel selling prices partially offset by lower volumes and input price increases. Liquidity and Capital Resources For the three months ended September 30, 2008, net cash provided by operating activities was $2.6 billion as compared with $4.2 billion for the three months ended June 30, 2008. As of September 30, 2008, the Company's cash and cash equivalents (including restricted cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments) amounted to $6.0 billion as compared to $7.5 billion at June 30, 2008. Net debt at September 30, 2008, which includes long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , net of current portion, plus our payables Payables Related: Accounts payable to banks and current portion of long-term debt Current Portion Of Long-Term Debt A portion of the balance sheet that represents the total amount of long-term debt that must be paid within the next year. The balance sheet has a liability section, which is broken down into long-term and current debt. less cash and cash equivalents, restricted cash and short-term investments, was $32.5 billion ($30.7 billion as at June 30, 2008). Gearing12 at September 30, 2008 was 49% as compared to 46% at June 30, 2008, and net debt to EBITDA ratio decreased to 1.2x13 at September 30, 2008, as compared with 1.3x at June 30, 2008. Net debt has increased primarily due to increased working capital, investments and share buy-backs. Operating working capital (defined as inventory plus receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed less payables) as at September 30, 2008 increased to $26.5 billion as compared to $23.3 billion as at June 30, 2008, mainly as a result of higher inventories due to summer vacations Summer vacation (also called summer holidays or summer break) is a vacation in the summertime between school years in which students are off for 3 months, depending on the country and district. . Rotation days14 increased from 63 to 82 days. The Company had total liquidity of $12.0 billion as at September 30, 2008 (as compared with $15.8 billion as at June 30, 2008) consisting of cash and cash equivalents (including restricted cash and short-term investments) of $6.0 billion and available bank lines of $6.15 billion as at September 30, 2008. On September 16, 2008, Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. upgraded the Company's "Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Issuer Default" (LT IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) and senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. ratings to "BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +" from "BBB" and affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the "Company's Short-term Issuer Default" rating at "F2", with the outlook on the LT IDR now "Stable." In June 2008, the Company entered into hedging transactions16 in order to hedge U.S. dollar denominated raw material purchases until 2012. As of September 30, 2008 the mark to market position of these hedged transactions amounted to a gain of approximately $1 billion. Capital expenditures during the three months ended September 30, 2008 increased to $1.8 billion, as compared with $1.4 billion for the three months ended June 30, 2008. Dividend and share buy-backs During the three months ended September 30, 2008, the Company returned $2.3 billion17 to shareholders, consisting of $0.5 billion in cash dividends and $1.8 billion in share buy-backs. As earlier communicated in respect of the 2007 dividend payment, during the first quarter 2008, the Company repurchased an aggregate of 14.6 million shares at an average price of $68.70 ([euro]46.60) for a total amount of $1.0 billion. In addition, with respect to its 44 million share buy-back program, during the first nine months of 2008, the Company repurchased an aggregate of 43.8 million shares at an average price of $78.58 ([euro]51.98) for a total amount of $3,440 million18. To date, the Company has purchased 43.9 million shares at an average price of $78.56 ([euro]51.97) under the 44 million shares buy-back program. (See appendix 3 "2008 Share buy-backs" below). Base dividend maintained at $1.50 per share for 2009 Considering ArcelorMittal's initiatives in response to the current operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. , the Board of Directors has recommended to maintain the Company's base dividend at $1.50 for 2009. As a consequence, the Board of Directors will submit to a shareholders vote, at the next annual general meeting, a proposal to maintain the quarterly dividend payment at $0.375. The dividend payments would occur on a quarterly basis for the full year 2009. Consequently, the new quarterly dividend payments would take place on March 16, 2009, June 15, 2009, September 14, 2009 and December 14, 2009, taking into account that the first quarter dividend payment to be paid on March 16, 2009 shall be an interim dividend. Final payment of current year dividend of $0.375 per share will be payable on December 15, 2008. As part of its distribution policy, ArcelorMittal expects to return 30% of net income to its shareholders through an annual base dividend supplemented by additional annual share buy-backs. These share buy-backs would be implemented once the $10 billion net debt reduction target has been achieved. Recent Developments: Upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger Activities: * On September 3, 2008, ArcelorMittal and Kalagadi Manganese manganese (măng`gənēs, măn`–) [Lat.,=magnet], metallic chemical element; symbol Mn; at. no. 25; at. wt. 54.938; m.p. about 1,244°C;; b.p. about 1,962°C;; sp. gr. 7.2 to 7. announced the unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. UNCONDITIONAL. participation of ArcelorMittal in Kalagadi Manganese, observing that all conditions precedent to the joint venture to develop Kalagadi's manganese deposits has been satisfied and the subscription amount paid. The $432.5 million deal will result in the establishment and implementation of a joint venture between ArcelorMittal (owning 50%), Kalahari Resources, a majority black women-owned and controlled company (owning 40%), and Industrial Development Corporation Limited, the South African state-owned financier (owning 10%). * On August 20, 2008, ArcelorMittal announced that the Company has agreed to acquire 100% of the issued share capital of London Mining South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. Limited, an iron ore miner in the state of Minas Gerais Minas Gerais (mē`nəs zhərīs`) [Port.,=various mines], state (1996 pop. 16,660,691), 226,707 sq mi (587,171 sq km), E Brazil. The capital is Belo Horizonte. Minas Gerais continues to produce more than half of Brazil's mineral wealth. , Brazil, from Oslo listed London Mining plc for approximately $764 million. The transaction also includes the assignment of inter-group loans from London Mining of approximately $46 million. The total consideration payable to London Mining will amount to approximately $810 million. * On August 11, 2008, ArcelorMittal, announced that it had signed an agreement to acquire 49% of the share capital of MPP (Massively Parallel Processing or Massively Parallel Processor) A multiprocessing architecture that uses up to thousands of processors. Some might contend that a computer system with 64 or more CPUs is a massively parallel processor. - Minera[?]ao Piramide Participa[?][?]es Ltda ("MPP"). MPP is a mining company located in Corumba in the State of Mato Grosso do Sul Mato Grosso do Sul (pron. IPA: ['ma.tu 'gɾo.su du suw] [1]) is one of the states of Brazil. Neighbouring states are (from north clockwise) Mato Grosso, Goiás, Minas Gerais, São Paulo and Paraná. , Brazil. MPP's activities are focused on the exploration and development of iron ore and manganese resources in the region. The price to be paid by ArcelorMittal will be calculated based on the amount of iron ore and manganese resources "in situ In place. When something is "in situ," it is in its original location. " assessed according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Code for the Reporting of Mineral Resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature and Ore Reserves of the Australasian Joint Ore Reserves Committee. * On August 4, 2008, ArcelorMittal, announced that it had signed an agreement to acquire the Koppers' Monessen Coke Plant from Koppers Inc. for $160 million. Koppers' Monessen Coke Plant, located in Monessen, Pennsylvania Monessen is a city in Westmoreland County, Pennsylvania, United States. The population was 8,669 at the 2000 census. In 1940, 20,257 people lived there. In 1990 the population was 13,026. produced 320,000 metric tons of metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. coke in 2007. The transaction has been completed. Steel Production Initiatives: * In October 2008, ArcelorMittal reported that it is adapting its growth plan to reflect market conditions, and will continue to assess the priorities of its different growth projects. * On August 13, 2008, ArcelorMittal announced that the Company signed a joint venture agreement for the production and sale of electrical (silicon) steel with Hunan Valin Steel Group Co., Ltd., following the auto sheet joint venture agreement signed by both parties in June. The new JV, named Valin ArcelorMittal Electrical Steel Electrical steel, also called lamination steel, silicon electrical steel, silicon steel or transformer steel, is specialty steel tailored to produce certain magnetic properties, such as a small hysteresis area (small energy dissipation per cycle, or low Co., Ltd is equally owned by the two parties. The joint venture plans to build cold rolling cold rolling n. The rolling of steel or other metal at room temperature to preserve its original crystal structure. and processing facilities for the production of non-grain oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. (NGO NGO abbr. nongovernmental organization Noun 1. NGO - an organization that is not part of the local or state or federal government nongovernmental organization ) and grain oriented (GO) electrical steels for an annual production of 400,000 tons of non-grain oriented and 200,000 tons of grain oriented steel. Other key events * On September 17, 2008, the Company announced a new "management gains" plan targeting a total cost savings of $4 billion over the next five years. The plan will target increasing employee productivity, reducing energy consumption and decreasing input costs to achieve a higher yield and improved product quality. * On September 16, 2008, Fitch Ratings upgraded the Company's "Long-term Issuer Default" (LT IDR) and senior unsecured ratings to "BBB+" from "BBB" and affirmed the "Company's Short-term Issuer Default" rating at "F2", with the outlook on the LT IDR now "Stable." For further disclosure about each of these recent developments, please refer to our website www.arcelormittal.com Outlook for the three months ended December 31, 2008 The Company expects fourth quarter 2008 EBITDA to be in the range of $2.5-$3.0 billion due to increased production cuts following weaker demand across all segments as a consequence of the current credit and economic environment. The Company expects positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the fourth quarter of 2008, and capital expenditures for the fourth quarter of 2008, to be approximately $1.5 billion. ARCELORMITTAL UNAUDITED CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. [TABLE OMITTED] ARCELORMITTAL UNAUDITED CONSOLIDATED STATEMENTS OF INCOME [TABLE OMITTED] ARCELORMITTAL UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS [TABLE OMITTED] [TABLE OMITTED] 1. As from January 1, 2008, the segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four has undergone scope changes to reflect the new management structure of the Group as announced on April 21, 2008. 2. During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested post-employment benefits. In addition it was agreed to pay an additional $90 million upon signing of the contract. 3. EBITDA which is defined as operating income plus depreciation and impairment expenses, and also excludes the accounting effects of the new labor contract. 4. Segmental capex figures include intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . 5. Average steel selling prices are calculated as steel sales divided by steel shipments. Steel sales exclude sales of coke, coal, direct reduced iron Direct reduced iron is produced from iron ore powder through heating and chemical reduction by natural gas. While this is in general a more expensive process than reducing the ore in a blast furnace, there are several factors which can make it economical: pig iron Crude iron obtained directly from the blast furnace and cast in molds (see cast iron). The crude ingots, called pigs, are then remelted along with scrap and alloying elements and recast into molds to produce , hot metal, slag, by-products by-products materials generated incidentally to the production of a principal product in an industry or industrial enterprise. In the meat industry by-products include blood, bone, fat, bristle, hair, wool, hide, skin, hoof, horn and offal products prepared in various ways for use , energy etc. [TABLE OMITTED] [TABLE OMITTED] 1. Includes shipments from Lazaro Cardenas (Mexico) and Dofasco (Canada). 2. Includes shipments from Sicartsa (Mexico). 3. Includes pipes and tubes business. [TABLE OMITTED] [TABLE OMITTED] 1. EBITDA which is defined as operating income plus depreciation and impairment expenses, and also excludes the accounting effects of the new labor contract. 2. Includes EBITDA from Lazaro Cardenas (Mexico) and Dofasco (Canada). 3. Includes EBITDA from Sicartsa (Mexico). 4. Includes pipes and tubes business. Appendix 3 - 2008 Share buy-backs [TABLE OMITTED] Appendix 4 Debt repayment schedule as at September 30, 2008 (in billion $) [TABLE OMITTED] * Most of these are expected to be rolled over as revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to type arrangements [TABLE OMITTED] * including back-up lines for commercial paper program ($4.3 billion) Euro denominated loans are converted at the following rate: Euro 1 = USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1.4303 as at September 30, 2008 Main financial covenant: Net debt/EBITDA not greater than 3.5x27 None of the debt is subject to Material Adverse Change "MAC" clauses 1 EBITDA which is defined as operating income plus depreciation and impairment expenses, and also excludes the accounting effects of the new labor contract. 2 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested post-employment benefits. In addition it was agreed to pay an additional $90 million upon signing of the contract. Under US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). a significant portion of this expense would have been recognized over a number of years. 3 Net debt is equal to long-term debt, net of current portion plus our payable to banks and current portion of long-term debt, less cash and cash equivalents, restricted cash and short-term investments. 4 The financial information in this press release and Appendix 1 has been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). ("IFRS") as issued by the International Accounting Standards Board  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and ("IASB IASB See International Accounting Standards Board (IASB). "). While the interim financial information included in this announcement has been prepared in accordance with IFRS applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting". Unless otherwise noted the numbers in the press release have not been audited. 5 US dollars have been translated into Euros using an average exchange rate ($/Euro) of 1.5050, 1.5622, 1.3738, 1.5218 and 1.3443 for Q3 2008, Q2 2008, Q3 2007, 9M 2008 and 9M 2007, respectively. 6 Shipments defined as the sum of segment shipments excluding AM3S AM3S Arcelor Mittal Steel Solutions and Services . Some intercompany shipments included. 7 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested post-employment benefits. It was also agreed to pay an additional $90 million upon signing of the contract. 8 As required by IFRS, this reduction of goodwill primarily resulted from the recognition of net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. previously not recognized in purchase accounting, among others due to reorganization in South America (amounting to $58 million in the third quarter and to $158 million in the second quarter). 9 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.5 billion primarily related to vested post-employment benefits. 10 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $0.2 billion primarily related to vested post-employment benefits. 11 Steel Solutions and Services shipments are not consolidated. 12 Gearing is defined as (A) long-term debt, net of current portion, plus our payables to banks and current portion of long-term debt, less cash and cash equivalents, restricted cash and short-term investments, divided by (B) total equity. 13 Based on last twelve months (LTM LTM abbr. long-term memory ) EBITDA. 14 Rotation days are defined as days of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying plus days of inventory minus days of accounts payable. Days of accounts payable and inventory are a function of cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . Days of accounts receivable are a function of sales. 15 Includes back-up lines for commercial paper program of approximately $4.3 billion ([euro]3.0 billion) 16 Hedging has been implemented using a combination of forward contracts and options in order to cap adverse effects due to market movements over the period. 17 Excluding dividends totalling $180 million paid to minority shareholders of subsidiaries (primarily South Africa). 18 ArcelorMittal holds, indirectly and directly, approximately 84.8 million shares in treasury as of September 30, 2008 19 Amounts are derived from the Company's audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the year ended December 31, 2007. 20 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested post-employment benefits. In addition it was agreed to pay an additional $90 million upon signing of the contract. 21 EBITDA which is defined as operating income plus depreciation and impairment expenses, and also excludes the accounting effects of the new labor contract. 22 Steel Solutions and Services shipments are not consolidated. (Million metric tonnes) 23 Total of all finished production of fines, concentrate, pellets and lumps (includes share of production and strategic long term contracts). (Million metric tonnes) 24 Employee figures for three months ended June 30, 2008 and September 30, 2008 include scope additions primarily for Noble, Russian mines and Unicon offset by disposal of Sparrows Point. 25 During the third quarter 2008, ArcelorMittal USA agreed to a new four year labor contract with its union employees. Management has concluded that under IFRS it is required to recognize a non-recurring expense in the third quarter of approximately $1.6 billion primarily related to vested post-employment benefits. In addition it was agreed to pay an additional $90 million upon signing of the contract. 26 Changes in working capital is defined as trade accounts receivable plus inventories less trade accounts payable plus prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. and less accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. . 27 Net debt/EBITDA ratio based on last twelve months EBITDA |
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