SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
DATED AUGUST 5, 2004
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Commission File Number: 001-14666
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ISPAT INTERNATIONAL N.V.
(Exact name of registrant as specified in its Charter)
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15th Floor, Hofplein 20
3032 AC Rotterdam
The Netherlands
(Address of registrant's principal executive offices)
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Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
Yes No X
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Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
Yes No X
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Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
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INDEX
Press Release of Ispat International N.V., dated August 5, 2004, regarding
financial results of Ispat International N.V. for the second quarter of 2004.
[GRAPHIC OMITTED]
For Immediate Release: Rotterdam, August 5, 2004
ISPAT INTERNATIONAL N.V. REPORTS RECORD
RESULTS FOR SECOND QUARTER 2004
Ispat International N.V., (NYSE: IST US; AEX: IST NA), today reported a record
net income of $325 million or $2.75 per share for the second quarter of 2004 as
compared to a net income of $14 million or $0.11 per share for the second
quarter of 2003. In the first quarter of 2004, the net income was $102 million
or $0.85 per share. The results for this quarter, in fact, exceeded the best
ever annual results achieved so far.
Consolidated sales and operating income for the second quarter were $2.1 billion
and $426 million, respectively, as compared to $1.4 billion and $58 million,
respectively, for the second quarter of 2003; and $1.8 billion and $158 million
respectively for the first quarter of 2004.
Total steel shipments were approximately 4.1 million tons(1), which represented
an increase of approximately 2% over the second quarter of 2003 and a decrease
of approximately 4% over the first quarter of 2004.
For the six-month period January-June 2004, Ispat International N.V.'s net
income was $427 million or $3.60 per share as compared to net income of $65
million or $0.52 per share for the six-month period January-June 2003.
Consolidated sales and operating income for the six month period January-June
2004 were $3.9 billion and $584 million respectively, compared to $2.7 billion
and $133 million respectively for the six-month period January-June 2003.
Total steel shipments for the six-month period January-June 2004 were 8.3
million tons, an increase of 6% compared to the six-month period January-June
2003.
The improved earnings were primarily due to strong demand for our products
across all markets. Our average price realization in the second quarter 2004
improved by 43% compared to the second quarter of 2003 and by 25% compared to
the first quarter of 2004, driven by higher base selling prices, raw material
surcharges and improved product mix. For the six-month period January-June 2004,
average price realization was 30% higher than the corresponding period of 2003.
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(1) The term "ton" means a short ton (ST). One short ton is equal to 2,000
pounds.
The situation with respect to availability and procurement prices of key raw
materials such as iron ore, scrap, coke and natural gas continued to remain
challenging. However, Ispat International was able to manage the situation
successfully, thereby maintaining shipments and customer service levels.
Overall, cost per ton during the quarter was higher by 23% as compared to the
second quarter of 2003 and by 9% compared to the first quarter of 2004. Cost per
ton during the six-month period January-June 2004 was higher by 18% compared to
the corresponding period of 2003.
There were no material unusual or one-time items during the quarter. Selling,
general and administrative expenses were marginally higher due to higher levels
of sales activity, as well as higher costs of logistics. Other income included a
gain from the sale of environmental credits at Ispat Inland. Net interest
expense was higher mainly due to the costs related to the issue of bonds by
Ispat Inland to refinance the previous term loan.
Details of Shipments, Sales and Operating Income at our main operating
subsidiaries were as follows:
------------------------------- ------------------------------ ---------------
Shipments
Subsidiary Q2 2004 Q2 2003 Q1 2004
000'Tons 000'Tons 000'Tons
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US and Canadian Operating 1,801 1,785 1,825
Subsidiaries
Ispat Europe Group 1,000 940 1,125
Other Subsidiaries 1,256 1,235 1,274
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------------------------------- ------------------------------ ---------------
Sales
Subsidiary Q2 2004 Q2 2003 Q1 2004
$ Million $ Million $ Million
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US and Canadian Operating 1,010 714 853
Subsidiaries
Ispat Europe Group 509 373 496
Other Subsidiaries 590 323 406
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------------------------------- ------------------------------ ---------------
Operating Income
Subsidiary Q2 2004 Q2 2003 Q1 2004
$ Million $ Million $ Million
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US and Canadian Operating 167 (20) 95
Subsidiaries
Ispat Europe Group 54 15 5
Other Subsidiaries 205 63 58
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For the six month period January - June:
----------------------------------------
------------------------------- ------------------------------
Shipments
Subsidiary Six Months Six
2004 Months 2003
000'Tons 000'Tons
------------------------------- ------------- ----------------
------------------------------- ------------- ----------------
US and Canadian Operating 3,627 3,433
Subsidiaries
Ispat Europe Group 2,126 1,941
Other Subsidiaries 2,528 2,418
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------------------------------- ------------------------------
Sales
Subsidiary Six Months Six
2004 Months 2003
$ Million $ Million
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US and Canadian Operating 1,862 1,410
Subsidiaries
Ispat Europe Group 1006 731
Other Subsidiaries 996 597
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------------------------------- ------------------------------
Operating Income
Subsidiary Six Months Six
2004 Months 2003
$ Million $ Million
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US and Canadian Operating 262 31
Subsidiaries
Ispat Europe Group 60 26
Other Subsidiaries 262 76
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Liquidity continues to improve. During the second quarter of 2004, working
capital increased by $117 million, mainly due to higher levels of inventories
and receivables driven by higher levels of costs and selling prices. The
underlying physical levels (represented by number of days' working capital)
remained largely unchanged. During the six month period January-June 2004,
working capital increased by $275 million.
Capital expenditure during the quarter was $35 million and during the six months
of 2004 was $56 million.
As at June 30, 2004, the Company's cash and cash equivalents were $143 million
($80 million at December 31, 2003 and $104 million at March 31, 2004). In
addition, the Company's operating subsidiaries had available borrowing capacity
of $223 million as at June 30, 2004. The comparable number was $236 million as
at March 31, 2004 and $143 million as at December 31, 2003.
During the second quarter 2004, the Company reduced net debt by $248 million,
consisting of reduction of borrowings by $209 million, largely by prepaying
long-term debt at its subsidiaries, and increase of $39 million in cash and cash
equivalents. During the six-
month period January-June 2004, borrowings was reduced by $160 million and net
debt was reduced by $223 million.
Total debt at the end of the quarter - which includes both long and short-term
debt, as well as borrowings under working capital credit facilities - was $2.1
billion, as compared to $2.3 billion at the end of the first quarter of 2004.
During the quarter, the Company purchased 2 million of its own shares from the
market under the previously announced share buy back program at an average price
of $12 per share. During the six-month period January-June 2004, the number of
its own shares purchased under this program was 5.3 million and the average
price was $10.25 per share.
Outlook for third quarter 2004
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The Company expects continued strong demand in all its principal markets.
However, third quarter shipments are traditionally lower due to seasonal
factors. The Company expects improved selling prices across all product segments
and flat to somewhat reduced shipments compared to second quarter. On the other
hand, there is likely to be continued pressure on availability and cost of all
major inputs.
Working capital is expected to increase due to increases in input prices and
sales. Capital expenditure is expected to be slightly higher in the third
quarter than in the second. A key milestone during the third quarter will be the
pre-commissioning trials at the new degasser facility in Mexico.
Ispat Inland's labor contract has been extended until August 15, 2004 by mutual
agreement between Ispat Inland and the United Steelworkers of America (USWA).
The contract was originally scheduled to expire on July 31, 2004. The Company is
hopeful that Ispat Inland will be able to finalize a new agreement with the
USWA. However, if such agreement does not take place, the existing agreement
contains provisions for recourse to binding interest arbitration, without any
disruption to operations.
Overall, the Company expects to benefit from strong market conditions for its
products. The third quarter is expected to be a better quarter than the second.
The summary consolidated financial and other information, including accounts of
Ispat International N.V. ("Ispat International" or "the Company") and its
consolidating subsidiaries are prepared in accordance with U.S. GAAP. All
material inter-company balances and transactions have been eliminated.
Quantitative information on total shipments of steel products includes
inter-company shipments.
Ispat International N.V. is one of the largest and most global steel producers,
with major steelmaking operations in the United States, Canada, Mexico,
Trinidad, Germany and France. The Company produces a broad range of flat and
long products sold mainly in the North American Free Trade Agreement (NAFTA)
participating countries and the European Union (EU) countries. Ispat
International N.V. is a member of the LNM Group.
This news release contains forward-looking statements that involve a number of
risks and uncertainties. These statements are based on current expectations and
actual results may differ materially from these expectations. Among the factors
that could cause actual results to differ are the risk factors listed in the
Company's most recent SEC filings
Additionally, the Company has made, and may continue to make, including in (but
not limited to) this Press Release, various forward-looking statements with
respect to its financial position, business strategy, projected costs, projected
savings, and plans and objectives of management. Such forward-looking statements
are identified by the use of the forward-looking words or phrases such as
'anticipates', 'intends', 'expects', 'plans', 'believes', 'estimates', or words
or phrases of similar import. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties, and the statements looking
forward beyond the second quarter of 2004 are subject to greater uncertainty
because of the increased likelihood of changes in underlying factors and
assumptions. Actual results could differ materially from those anticipated in
the forward-looking statements.
For further information, visit our web site: http://www.ispat.com, or call:
Ispat International Limited Citigate Financial Intelligence
T.N. Ramaswamy John McInerney / Jessica Wolpert
Director, Finance Investor Relations
+ 44 20 7543 1174 +1 201 499 3535 / +1 201 499 3533
CONSOLIDATED BALANCE SHEETS UNDER U.S. GAAP
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As at
June 30, December 31,
In millions of U.S. Dollars 2004 2003
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents, including short term investments $143 $80
Trade accounts receivable - net 695 507
Inventories 947 828
Prepaid expenses and other 119 105
Deferred tax assets 54 30
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Total Current Assets 1,958 1,550
Property, plant and equipment - net 3,028 3,091
Investments in affiliates and Joint Ventures 262 252
Deferred tax assets 454 535
Intangible pension assets 112 117
Other assets 110 90
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Total Assets $5,924 $5,635
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Payable to banks and current portion of long-term debt $167 $363
Trade accounts payable 629 577
Accrued expenses and other current liabilities 524 492
Deferred tax liabilities 32 28
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Total Current Liabilities 1,352 1,460
Long term debt including affiliates 1,950 1,914
Deferred tax liabilities 106 74
Deferred employee benefits 1,883 1,906
Other long term obligations 115 132
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Total Liabilities 5,406 5,486
Shareholders' equity
Common shares 7 7
Treasury stock (150) (110)
Additional paid-up capital 576 586
Retained earnings 635 207
Cumulative other comprehensive income (550) (541)
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Total Shareholders' equity 518 149
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Total Liabilities and Shareholders' Equity $5,924 $5,635
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CONSOLIDATED FINANCIAL
& OTHER INFORMATION AS PER U.S. GAAP
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For the Second For the Six
Quarter Ended June 30, Months Ended
June 30,
In millions of U.S. Dollars, except share, per share and other data 2004 2003 2004 2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
STATEMENT OF INCOME DATA
Sales 2,109 1,410 3,864 2,738
Costs and expenses:
Cost of sales (exclusive of depreciation shown separately) 1,588 1,263 3,090 2,430
Depreciation 48 46 99 91
Selling, general and administrative expenses 47 43 91 84
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1,683 1,352 3,280 2,605
Operating income (loss) 426 58 584 133
Operating margin 20.2% 4.1% 15.1% 4.9%
Other income (expense) - net 11 - 37 20
Financing costs:
Interest (expense) (47) (41) (88) (85)
Interest income - 4 1 7
Net gain (loss) from foreign exchange 3 (8) 2 (2)
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(44) (45) (85) (80)
Income (loss) before taxes 393 13 536 73
Income tax expense (benefit):
Current 12 5 16 9
Deferred 56 (6) 93 (3)
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68 (1) 109 6
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Net income before change in accounting principle 325 14 427 67
Cumulative effect of change in accounting principle - - - (2)
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Net income (loss) $325 $14 $427 $65
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Basic and diluted earnings per common share 2.75 0.11 3.60 0.52
Weighted average common shares outstanding (in millions) 118 122 118 122
OTHER DATA
Total shipments of steel products including inter-company shipments
(thousands of tons) 4,057 3,960 8,281 7,792
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CONSOLIDATED STATEMENTS OF CASH FLOWS AS PER U.S. GAAP
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For the Second Quarter For the Six
Ended Months Ended
June 30, June 30,
In millions of U.S. Dollars 2004 2003 2004 2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating activities:
Net income 325 14 427 65
Adjustments required to reconcile net income to net cash provided
from operations:
Depreciation 48 46 99 91
Deferred employee benefit costs (7) 6 (13) 12
Net foreign exchange loss (gain) (2) 5 (2) 1
Deferred income tax 55 (5) 94 (2)
Undistributed earnings from joint ventures (17) (4) (44) (19)
Other operating expenses 8 6 (2) 1
Changes in operating assets and liabilities, net of effects from
purchases of subsidiaries:
Trade accounts receivable (65) (30) (200) (7)
Inventories (99) 24 (130) (2)
Prepaid expenses and other assets 19 1 (17) (31)
Trade accounts payable (19) (45) 47 (64)
Accrued expenses and other liabilities 47 24 25 28
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Net cash provided (used) by operating activities 293 42 284 73
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Investing activities:
Purchase of property, plant and equipment (35) (37) (56) (56)
Proceeds from sale of assets and investments including affiliates - - 18 18
Investments in affiliates and joint ventures 9 3 17 14
Other investing activities 2 - 2 -
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Net cash provided (used) by investing activities (24) (34) (19) (24)
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Financing activities:
Proceeds from payable to banks 603 955 1,533 1,671
Proceeds from long-term debt including from affiliates 36 6 890 44
Payments of payable to banks (600) (896) (1,613) (1,638)
Payments of long-term debt including affiliates (247) (73) (960) (131)
Purchase of treasury stock (24) (7) (54) (9)
Capital contribution - - (2) -
Sale of treasury stock 2 - 4 -
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Net cash provided (used) by financing activities (230) (15) (202) (63)
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Net increase (decrease) in cash and cash equivalents 39 (7) 63 (14)
Effect of exchange rate changes on cash - 1 - 2
Cash and cash equivalent:
At the beginning of the period 104 71 80 77
At the end of the period 143 65 143 65
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: August 5, 2004
ISPAT INTERNATIONAL N.V.
By: /s/ Bhikam C. Agarwal
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Bhikam C. Agarwal
Chief Financial Officer