Mittal Steel Company N.V. Reports Record Fourth Quarter 2004 and Full Year 2004 Results ROTTERDAM, The Netherlands, February 10 /PRNewswire-FirstCall/ -- Mittal Steel Company N.V., ("Mittal Steel" or "the Company") the world's most global steel company, today announced results for the twelve months and fourth quarter ended December 31, 2004. Highlights 12 months ended December 31, 2004: % Change 2004 v 2003 - Shipments: 42.1 million tons 53% - Revenues: US$22.2 billion 132% - Operating income: US$6.1 billion 373% - Net income: US$4.7 billion 298% - 4 major acquisitions, including Polska Stal, completed in the year - Announces dividend policy These are Mittal Steel stand-alone results excluding results of the transaction with ISG, which is expected to close in Quarter 1 2005. Commenting, Lakshmi N. Mittal, Chairman and CEO, Mittal Steel Company, said: "2004 was an excellent year for Mittal Steel. We experienced a strong demand for our products across all markets, combined with higher selling prices and a substantial rise in our total shipments due to the completion of a number of key strategic acquisitions. This resulted in record results for the company. Our focus has always been to be a low-cost producer and this is reflected in our operating margin of 27.7%. Mittal Steel has now built positions of strength across our key three operating regions: Americas, Europe and the Rest of the World. Looking forward, we are anticipating stable demand during 2005. Global supply and demand remains fairly balanced and Mittal Steel is well positioned to take advantage of the current market dynamics." Fourth Quarter and Full Year 2004 Earnings Conference Call Lakshmi Mittal, Chairman and Chief Executive Officer, and Aditya Mittal, President and Chief Financial Officer, will host a conference call for members of the investment community to discuss the company's financial results and general business operations at 10:30 AM New York Time / 3:30 PM London time today. The conference call will include a brief question and answer session with senior management. The conference call information is as follows: Date: Thursday, February 10, 2005 Time: 10:30 AM New York Time / 3:30 PM London Time Dial-In Number from within the U.S.: 1-877-780-2271 Dial-In Number from outside the U.S.: 001-973-582-2737 For individuals unable to participate in the conference call, a telephone replay will be available from 1:00 PM New York Time / 6:00 PM London Time on February 10, 2005 until midnight / 5:00 AM London Time on February 18, 2005 at: Replay Number from within the U.S.: 1-877-519-4471 Replay Number from outside the U.S.: 001-973-341-3080 Passcode: 5637135 A webcast of the conference call can also be accessed via http://www.mittalsteel.com/ and will be available for one week. RealPlayer or Windows Media Player will be required in order to access the webcast. MITTAL STEEL COMPANY N.V. REPORTS RECORD FOURTH QUARTER 2004 and FULL YEAR 2004 RESULTS Mittal Steel Company N.V. (NYSE:MT)(AEX:MT), net income for the twelve months ended December 31, 2004 was $4.7 billion or $7.31 per share, as compared to net income of $1.2 billion or $1.83 per share for the twelve months ended December 31, 2003. Consolidated sales and operating income for the twelve months ended December 31, 2004 were $22.2 billion and $6.1 billion, respectively, compared to $9.6 billion and $1.3 billion, respectively, for the twelve months ended December 31, 2003. Total steel shipments for the year 2004 were 42.1 million tons as compared to 27.4 million tons in 2003. Mittal Steel Company N.V. net income for the fourth quarter of 2004 was $1.6 billion or $2.42 per share as compared to net income of $1.3 billion or $2.07 per share for the third quarter of 2004. Consolidated sales and operating income for the fourth quarter of 2004 were $6.2 billion and $1.7 billion, respectively, as compared to $6.3 billion and $1.9 billion, respectively, for the third quarter of 2004. Total steel shipments were 10.1 million tons in the fourth quarter 2004 as compared to 11.0 million tons in the third quarter 2004. This is Mittal Steel's first earnings release after the completion of the acquisition by the former Ispat International N.V. of the former LNM Holdings N.V. On December 17, 2004, Ispat International N.V. completed its acquisition of LNM Holdings N.V. and changed its name to Mittal Steel Company N.V. As Ispat International N.V. and LNM Holdings N.V. are affiliates under common control, the acquisition of LNM Holdings N.V. is accounted for on the basis of common control accounting, which is similar to the method of accounting formerly known as a "pooling-of-interests'. These consolidated financial statements reflect the financial position and results of operations for Mittal Steel as though the former Ispat International N.V. and the former LNM Holdings N.V., were part of the combined Mittal Steel Company N.V. during all the periods presented herein. Intercompany balances and transactions have been eliminated in consolidation. On a pro-forma basis Mittal Steel Company N.V. including ISG, achieved shipments of 57.6 million tons, sales of $31.2 billion, operating income of $7.0 billion and net income of $5.7 billion or $8.13 per share for the twelve months ended December 31, 2004. All pro-forma numbers assume the maximum issuance of shares and figures do not include any purchase accounting adjustments. (Refer to ISG's recent press release for their financial information). Analysis of operations Mittal Steel's consolidated financial statements for the year ended December 31, 2004 include the results of the following operations, the results of which were not, or were not fully, included in the year ended December 31, 2003. - The results of Ispat Polska were included from March 5, 2004, the date of its acquisition by Mittal Steel. - Iscor was consolidated from January 1, 2004, following the increase of Mittal Steel's shareholding in this company to a majority. - Mittal Steel acquired Ispat Nova Hut on January 31, 2003. Therefore the relevant results of operations of Ispat Nova Hut for 2003 are included only for the eleven months ended December 31, 2003. - Mittal Steel acquired controlling interests in Ispat Tepro in July 2003, Ispat Petrotub in December 2003 and Ispat Siderurgica in April 2004. - Mittal Steel acquired RZ Valavnica Z.A. Lenti AD and RZ Ladna Valavnica AD (the "Macedonian Operations") in May 2004. Due to these acquisitions the comparison of 2004 with past periods may not be meaningful. Average price realization in the fourth quarter of 2004 improved by 9% compared to the third quarter of 2004, driven by higher base selling prices, raw material surcharges and improved product mix. For the year 2004, average price realization was 54% higher than 2003. Steel shipments were lower by 8% in the fourth quarter 2004 as compared to the third quarter 2004 due to a combination of shipping delays and outages. Due to the increases in the cost of key inputs, such as iron ore, scrap, electricity, natural gas and transportation, cost of goods sold per ton during the fourth quarter 2004 was higher by 8% compared to the third quarter of 2004. Cost of goods sold per ton during the year 2004 was higher by 31% compared to 2003. Selling, general and administrative expenses in the fourth quarter of 2004 increased by 61% compared to the third quarter of 2004. Selling, general and administrative expenses were 118% higher for the year 2004 as compared to the year 2003 due to higher levels of sales activity, as well as higher costs of logistics. Other income included one-time cash gain of $109 million in Europe in the fourth quarter 2004. The relatively low rate of tax cost both in the fourth quarter 2004 and the full year 2004 was primarily due to the release of certain tax valuation allowances (FAS 109) of $375 million in certain subsidiaries due to the improvement in outlook. Mittal Steel has decided to divide its operations into three geographical regions, viz. Americas, Europe and Rest of the World. The Americas region consists of the Company's subsidiaries in United States, Canada, Mexico and Trinidad and Tobago. The European region consists of the Company's subsidiaries in Bosnia, Czech Republic, France, Germany, Macedonia, Poland and Romania. The Rest of the World region consists of the Company's subsidiaries in all other countries, currently mainly Kazakhstan, Algeria and South Africa. These regions will be the basis for all the analysis the Company will present in the future. Americas Total steel shipments of the Americas region were 2.8 million tons in the fourth quarter 2004, as against 3.2 million tons for the third quarter 2004. For the full year 2004 total steel shipments were 12.1 million tons as compared to 11.6 million tons for the year 2003. Sales were marginally lower at $1.8 billion in the fourth quarter 2004, as against $1.9 billion for the third quarter of 2004. For the full year 2004 sales were $6.6 billion as compared to $4.1 billion for the year 2003. The operating income was $483 million for the fourth quarter 2004 as compared to $580 million for the third quarter of 2004. For the full year 2004 operating income was $1.6 billion as compared to $136 million for the year 2003. Europe Our European region achieved total steel shipments of 4.5 million tons in the fourth quarter 2004, as compared to 4.7 million tons for the third quarter 2004. For the year 2004 shipments were 18.0 million tons as against 10.7 million tons for the year 2003. Sales were flat at $2.8 billion in the fourth quarter 2004, as compared to the third quarter of 2004. Sales for the year 2004 increased to $9.9 billion as compared to $3.8 billion for the year 2003. The operating income was $480 million for the fourth quarter 2004 as compared to $644 million for the third quarter of 2004. Operating income for the year 2004 was $2.0 billion as compared to $317 million for the year 2003. Rest of the World Our Rest of the World region achieved total steel shipments of 2.8 million tons in the fourth quarter 2004, as compared to 3.1 million tons for the third quarter 2004. For the year 2004 shipments were 11.9 million tons as against 5.1 million tons for the year 2003. Sales increased to $2.2 billion in the fourth quarter 2004, as compared to $2.0 billion in the third quarter of 2004. Sales for the year 2004 increased to $7.6 billion as compared to $2.3 billion for the year 2003. The operating income remained relatively flat at $688 million for the fourth quarter 2004 as compared to $668 million for the third quarter of 2004. Operating income for the year 2004 was $2.4 billion as compared to $707 million for the year 2003. Liquidity The Company's liquidity is strong. As at December 31, 2004, the Company's cash and cash equivalents including restricted cash were $2.6 billion ($900 million at December 31, 2003 and $2.3 billion at September 30, 2004). In addition, the Company's operating subsidiaries had available borrowing capacity of $1.5 billion as at December 31, 2004.[1] Total debt at the end of 2004, which includes long-term debt, short-term debt, loan from shareholder and including dividend payable, as well as borrowings under working capital credit facilities, was $3.6 billion, as compared to $3.1 billion at the end of 2003. Net Debt (which is total debt including loan from shareholder and dividend payable less cash and cash equivalents and restricted cash) at the end of 2004 was $996 million and $486 million at September 30, 2004. During the fourth quarter of 2004, working capital decreased by $226 million, mainly due to decreased receivables at year-end, although inventories were higher. During the year 2004, working capital increased by $1.1 billion largely due to higher level of inventory and accounts receivables, partly offset by increased trade payables and increased accrued expenses and other liabilities. Capital expenditures during the fourth quarter 2004 were $376 million and for the year 2004 were $898 million. Depreciation during the year 2004 was $553 million. During the year ended December 31, 2004, the Company purchased 5.3 million of its own shares for $54 million (at an average price of $10.25 per share). The last such purchase was made in the second quarter 2004. On a pro-forma basis Mittal Steel Company N.V., including ISG had a net debt (which includes total debt including dividend payable and transaction consideration payable to ISG, less cash and cash equivalents and restricted cash) of $3.4 billion at the end of 2004.[2] Dividend policy The Company proposes a dividend policy for the fiscal year 2005. The board of directors approved 10 U.S. cents per share per quarter. This proposal has to be approved by the shareholders of the Company. Recent Developments On February 1, 2005, Moody's Investor Services Ltd. assigned a "Baa3' senior implied rating to Mittal Steel and upgraded Mittal Steel's senior unsecured issuer rating to "Ba1'. In addition, Moody's Investor Services Ltd. upgraded the senior notes of Ispat Europe Group ("IEG") and Ispat Inland to "Ba1'. On January 25, 2005, Mittal Steel announced that it had arranged commitments, subject to customary conditions, from a group of arrangers for a $3.2 billion unsecured revolving credit facility, the proceeds of which it expects to utilize to finance the cash portion of the merger with ISG, to refinance certain existing indebtedness and for general corporate purposes. On January 24, 2005, Standard & Poor's Ratings Services raised its long-term corporate credit rating of the Company to BBB from BB-, and raised its senior secured debt ratings on Ispat Inland to "BBB-" from "BB-". On January 14, 2005, Mittal Steel signed a share purchase agreement with Hunan Valin Iron & Steel Group Co., Ltd., or the Valin Group, to acquire 37.17% of the outstanding shares of Hunan Valin Steel Tube & Wire Co., Ltd., or Valin, a listed subsidiary of the Valin Group. Under the terms of the share purchase agreement, Mittal Steel will acquire 656,250,000 legal person shares from the Valin Group at a price of Renminbi, or RMB, 3.96 per share, for a total consideration of RMB 2,599 million, approximately $314 million. The consideration is subject to adjustment based on the net asset value of Valin as at December 31, 2004. Subject to the receipt of all necessary approvals and waivers from the regulatory authorities in the Peoples Republic of China, the transaction is expected to close in the second quarter of 2005. On December 30, 2004, Inland, a wholly owned subsidiary of Mittal Steel, redeemed $227,500,000 principal amount of its 93/4% senior secured notes due 2014, at a redemption price equal to 1093/4% of the outstanding principal amount redeemed, plus accrued and unpaid interest on such amount to, but excluding, December 30, 2004. Prior to the redemption of the notes by Ispat Inland ULC, Mittal Steel purchased $256,000,000 of capital stock of Inland. Consistent with the terms of the indenture with respect to the notes, the cash proceeds from the stock offering were used to redeem the notes. After giving effect to this redemption, $422,500,000 principal amount of the 93/4% senior secured notes due in 2014 remain outstanding. On December 15, 2004, the shareholders of Mittal Steel approved the acquisition of LNM Holdings and resolved to amend Mittal Steel's articles of association, which included the change of name of the company from "Ispat International N.V.' to "Mittal Steel Company N.V.' On December 17, 2004 the acquisition of LNM Holdings was completed. Under the terms of the LNM Holdings acquisition agreement an entity controlled by the controlling shareholder of Mittal Steel received 0.27931958 Mittal Steel class A common shares and 0.77068042 Mittal Steel class B common shares, for each LNM Holdings common share, or, in the aggregate, 139,659,790 Mittal Steel class A common shares and 385,340,210 Mittal Steel class B common shares In October 2004, Mittal Steel announced that its board of directors had approved a transaction pursuant to which International Steel Group ("ISG") will be merged with a wholly owned subsidiary of Mittal Steel. Mittal Steel is working on various steps required to complete this transaction and it is currently expected that this transaction will close in the first quarter of 2005. Outlook for the year 2005 We expect to complete the ISG merger in the first quarter 2005. This outlook includes ISG on pro-forma basis. The Company expects stable demand for its products during the year 2005 and across geographical regions. We expect shipments to increase to approximately 62 million tons. Both selling prices and costs are expected to be higher, driven primarily by an increase in cost of inputs. The Company, however, expects to maintain operating profit per ton, at a similar level to the year 2004. Capital expenditures will be approximately $1.5 billion. Effective tax rate for the year 2005 should be substantially higher at approximately 25%-30%. Outlook for first quarter 2005. For the first quarter 2005, Mittal Steel Company N.V., expects operating income per ton to be similar as compared to the fourth quarter 2004. Shipments are expected to marginally increase, however, effective tax rates are expected to go up substantially, as stated earlier. Statements in this press release that are not historical facts, including statements regarding expectations concerning market growth and development, expectations and targets for Mittal Steel's results of operations and expectations regarding the timing of the ISG transaction, and statements preceded by "believe," "expect," "anticipate," "target" or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those implied by such forward-looking statements on account of known and unknown risks and uncertainties, including, without limitation: (1) changes in general economic, political and social conditions; (2) adverse regulatory changes; (3) fluctuations in currency exchange rates; (4) cyclicality of the steel industry; (5) increased competition; (5) availability and cost of raw materials, energy and transportation; (6) Mittal Steel's ability to realize expected cost savings from recently acquired companies within the expected time frame; (7) Mittal Steel's ability to integrate recently acquired companies; (8) labor disputes; (9) the timing of completion of the various steps needed to consummate the ISG transaction; and (10) the risks contained in Mittal Steel's Form 20-F and other filings with the Securities and Exchange Commission. Mittal Steel undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. Additional information and where to find it Mittal Steel has filed with the Securities and Exchange Commission a registration statement on Form F-4 that includes a preliminary proxy statement of ISG and a preliminary prospectus of Mittal Steel and other relevant documents in connection with the proposed merger involving Mittal Steel and ISG. In addition, Mittal Steel will publish and make available to shareholders of Mittal Steel, and file with Euronext Amsterdam N.V., a prospectus and shareholders circular. Investors and security holders are urged to carefully read the prospectus regarding the proposed merger when it becomes available because it will contain important information and to exclusively base their investment decision on this prospectus once available. Investors and security holders of Mittal Steel and ISG are urged to read the definitive proxy statement and prospectuses and other relevant materials when they become available because they will contain important information about Mittal Steel and ISG and the proposed merger. Investors and security holders may obtain a free copy of these materials (when they are available) and other documents filed with the Securities and Exchange Commission at the SEC's website at http://www.sec.gov/. Mittal Steel and ISG and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the ISG stockholders with respect to the proposed merger. Information regarding the interests of these officers and directors in the proposed merger is included in the preliminary proxy statement/prospectus contained in the above-referenced registration statement on Form F-4 initially filed with the SEC on December 14, 2004, as amended on February 3, 2005. You may obtain documents filed with the SEC by Mittal Steel free of charge if you request them in writing from Mittal Steel Company N.V., 15th Floor, Hofplein 20, 3032 AC Rotterdam, The Netherlands, or by telephone at +31 10 217 8800. You may also obtain documents filed with the SEC by ISG free of charge if you request them in writing from Investor Relations, International Steel Group Inc., 4020 Kinross Lakes Parkway, Richfield, Ohio 44286-9000, or by telephone at (330) 659-7430. For further information, visit our web site: http://www.mittalsteel.com/, or call: MITTAL STEEL COMPANY N.V. CONSOLIDATED BALANCE SHEETS UNDER U.S. GAAP As at December 31, December 31, In millions of U.S. Dollars 2004 2003 (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents 2,495 760 Restricted cash 138 140 Short-term investments 1 - Trade accounts receivable - net 2,006 889 Inventories 4,013 1,587 Prepaid expenses and other 666 275 Deferred tax assets 306 32 Total Current Assets 9,625 3,683 Property, plant and equipment - net 7,562 4,654 Investments in affiliates and joint ventures 667 967 Deferred tax assets 855 536 Intangible pension assets 106 117 Other assets 338 180 Total Assets 19,153 10,137 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Payable to banks and current portion of 341 780 long-term debt Trade accounts payable 1,899 1,015 Dividend payable 1,650 - Accrued expenses and other current liabilities 2,307 796 Deferred tax liabilities 33 28 Total Current Liabilities 6,230 2,619 Long-term debt 1,639 2,193 Loan from shareholder - 94 Deferred tax liabilities 955 263 Deferred employee benefits 1,931 1,933 Other long-term obligations 809 213 Total Liabilities 11,564 7,315 Minority Interest 1,743 261 Shareholders' Equity Common shares 59 59 Treasury stock (123) (110) Additional paid-up capital 552 584 Retained earnings 4,739 2,423 Cumulative other comprehensive income 619 (395) Total Shareholders' Equity 5,846 2,561 Total Liabilities, Minority Interest and 19,153 10,137 Shareholders' Equity MITTAL STEEL COMPANY N.V. CONSOLIDATED FINANCIAL & OTHER INFORMATION AS PER U.S. GAAP For the Fourth Quarter For the Year Ended Ended December 31, December 31, In millions of U.S. 2004 2003 2004 2003 Dollars, except share, per share and other data (Unaudited) (Unaudited) (Unaudited) (Audited) STATEMENT OF INCOME DATA Sales 6,177 2,448 22,197 9,567 Costs and expenses: Cost of sales (exclusive 4,017 1,969 14,694 7,568 of depreciation shown separately) Depreciation 141 88 553 331 Selling, general and 294 110 804 369 administrative expenses 4,452 2,167 16,051 8,268 Operating income (loss) 1,725 281 6,146 1,299 Operating margin 27.9% 11.5% 27.7% 13.6% Other income (expense) - 104 31 128 70 net Income from equity method 20 60 66 162 investments Financing costs: Interest (expense) (86) (42) (265) (200) Interest income 36 9 78 25 Net gain (loss) from (29) 33 (20) 44 foreign exchange (79) - (207) (131) Income (loss) before 1,770 372 6,133 1,400 taxes Income tax expense (benefit): Current 266 16 731 43 Deferred (264) 40 86 141 2 56 817 184 Net income (loss) before 1,768 316 5,316 1,216 minority interest and before cumulative effect of change in accounting principle Minority interest (214) 8 (615) (35) Net income before 1,554 324 4,701 1,181 cumulative effect of change in accounting principle Cumulative effect of - 3 - 1 change in accounting principle - net of tax Net income 1,554 327 4,701 1,182 Basic and diluted 2.42 0.51 7.31 1.83 earnings per common share Weighted average common 643 647 643 647 shares outstanding (in millions) OTHER DATA Total shipments of steel products including inter-company shipments 10,097 7,015 42,071 27,446 (thousands of tons) MITTAL STEEL COMPANY N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS AS PER U.S. GAAP For the Fourth Quarter For the Year Ended Ended December 31, December 31, In millions of U.S. 2004 2003 2004 2003 Dollars (Unaudited) (Unaudited) (Unaudited) (Audited) Operating activities: Net income 1,554 327 4,701 1,182 Adjustments required to reconcile net income to net cash provided from operations: Depreciation 141 88 553 331 Deferred employee benefit (111) (21) (119) (167) costs Net foreign exchange loss 31 (24) 28 (32) (gain) Deferred income tax (264) 40 86 141 Loss from early 22 - 22 - extinguishments of debt Income from equity method (42) (14) (138) (140) investment Distribution from equity - 30 - 48 method investment (20) - (19) - Loss (gain) on sale or write-off of Property Plant & Equipment Minority interest 214 (8) 615 35 Other (4) - (8) 15 Changes in operating assets and liabilities, net of effects from purchases of subsidiaries: Trade accounts receivable 449 5 (386) - Short-term investments 3 (1) - - Inventories (564) (26) (1,374) (18) Prepaid expenses and 201 (2) (160) (87) other assets Trade accounts payable (93) 125 160 (51) Accrued expenses and 230 (15) 650 181 other liabilities Net cash provided by 1,747 504 4,611 1,438 operating activities Investing activities: Purchase of property, (376) (129) (898) (421) plant and equipment Proceeds from sale of assets and investments 61 5 83 26 Including affiliates and joint ventures Investments in affiliates 12 (54) 34 (280) and joint ventures Acquisition of net assets (12) (16) (19) (21) of subsidiaries, net of cash acquired Restricted cash 89 (69) 2 (118) Other (8) (2) (3) - Net cash provided (used) (234) (265) (801) (814) by investing activities Financing activities: Proceeds from payable to 91 839 2,258 3,646 banks Proceeds from long-term 197 (18) 1,185 52 debt - net of debt issuance costs Proceeds from long-term 30 94 76 94 debt from an affiliate Payments of payable to (362) (910) (2,738) (3,636) banks Payments of long-term (752) (35) (2,127) (226) debt Payment of long-term debt (175) - (175) (40) to an affiliate Capital contribution (3) - (10) - Purchase of treasury - - (54) (8) stock Sale of treasury stock 2 - 19 - Dividends (351) (110) (763) (164) Net cash (used) by (1,323) (140) (2,329) (282) financing activities Net increase in cash and 190 99 1,481 342 cash equivalents Effect of exchange rate 207 11 254 23 changes on cash Cash and cash equivalent: At the beginning of the 2,098 650 760 395 period At the end of the period 2,495 760 2,495 760 [1] Corresponding exercisable/available limits are lower, which are based on the level of inventory/receivable. [2] All pro-forma numbers assume the maximum issuance of shares and figures do not include any purchase accounting adjustments. Refer to ISG's recent press release for their financial information. DATASOURCE: Mittal Steel Company N.V. CONTACT: Mittal Steel Company N.V., T.N. Ramaswamy, Director, Finance +44-20-7543-1174 Mittal Steel Company N.V., Nicola Davidson, General Manager, +44-20-7543-1162 Mr. Chuck Burgess, Ms. Gillian Angstadt, Abernathy MacGregor Group, +1-212-371-5999

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