| |
Net income for the year 2000 of $18.1
million, or $1.73 per share, included
three special items:
- a $9.9 million after-tax recovery
on an insurance claim related to lost
1999 sales;
- a $5.2 million tax credit reflecting
a reassessment of income tax obligations
based on current audits of prior years’
federal tax returns; and
- a $7.1 million after-tax charge to
recognize the decrease in value of
the Company’s investment in LTV
common stock.
Year 1999 net income included favorable after-tax
income adjustments of $4.4 million that related
primarily to prior years’ state tax refunds.
Excluding special items in both years, net
income in 2000 of $10.1 million was $9.7 million
higher than 1999 net income of $.4 million.
The $9.7 million improvement in 2000 net income
before special items reflected higher income
before income taxes, $14.4 million, partially
offset by higher income taxes, $4.7 million.
The increase in pre-tax income before special
items was primarily due to:
- An improvement of $19.2 million in
pellet sales margin from the 1999
negative margin of $20.0 million.
Following is a summary comparison of sales
margin for 2000 and 1999:
| |
(In
Millions)
|
|
| |
|
|
Increase
|
(Decrease)
|
| |
2000 |
1999 |
Amount |
Percent |
|
|
|
|
|
| Sales (Tons) |
10.4 |
8.9 |
1.5 |
17% |
|
|
|
|
|
| Revenue from
product sales and services |
$379.4 |
$316.1 |
$63.3 |
20% |
| Cost of goods
sold and operating expenses |
380.2 |
336.1 |
44.1 |
13% |
|
|
|
|
|
| Sales
margin (loss) |
$(.8) |
$(20.0) |
$19.2 |
96% |
- Revenue from product
sales and services increased $63.3 million
primarily due to the 1.5 million ton sales
volume increase along with a modest improvement
in average sales price realization. The
increase in cost of goods sold and operating
expenses reflected the increase in volume,
production curtailments in 1999 and significant
increases in energy rates, which added
almost $14 million to cost in 2000.
- Royalty and management
fees, including amounts paid by the
Company as a participant in the mining
ventures, of $50.7 million in 2000
versus $48.5 million in 1999, an increase
of $2.2 million, primarily due to
increased production at Tilden Mine.
- Higher other income,
$3.3 million, including insurance
company demutualization proceeds,
favorable settlement of a legal dispute,
and gains from sales of non-strategic
lands.
Partially offsetting were:
- Higher Cliffs and
Associates Limited (“CAL”)
pre-operating losses, $4.5 million,
reflecting continuing plant start-up
difficulties, holding costs during
plant modifications, and the Company’s
increased ownership in the venture
as of November 20, 2000. (See Ferrous
Metallics.)
- Increased administrative,
selling and general expense, $2.6
million, due to higher active and
retiree medical costs and pensions,
and increased management incentive
compensation expense.
- Higher other expenses,
$2.0 million, largely reflecting the
reserving of amounts related to administrative
services and management fees from
LTV’s wholly-owned LTV Steel
Mining Company (“LTVSMC”)
as a result of the LTV filing for
protection under Chapter 11 of the
U.S. Bankruptcy Code on December 29,
2000.
- Higher interest
expense, $1.2 million, resulting from
the cessation of interest capitalization
in April, 1999 on the construction
of CAL’s hot briquetted iron
(“HBI”) facility in Trinidad
and Tobago.
The $4.7 million increase
in income taxes before special items was principally
due to higher pretax income.
Top
of Page | Next
Page
|
