EX-99 3 exhibit1_form6k021003.txt EXHIBIT 1 EXHIBIT 1 --------- [GRAPHIC OMITTED] [LOGO - IPSCO] NEWS RELEASE ================================================================================ FOR RELEASE FEBRUARY 10, 2003, 6 AM EST IPSCO ENDS 2002 PROFITABLY PLEASE NOTE THAT IPSCO RESULTS ARE REPORTED IN U.S. DOLLARS [LISLE, ILLINOIS] [February 10, 2003] -- IPSCO Inc. (NYSE/TSX: IPS) announced today record sales of $1.08 billion, up 20% over 2001 and 14% higher than the previous record set in 2000. Net income was $20.3 million compared to $38.9 million last year. Net income attributable to common shareholders was $8.9 million, compared to $27.4 million in 2001. Both basic and diluted earnings per share in 2002 were $0.19, compared to $0.67 and $0.66 per share respectively in 2001. The 2002 fourth quarter and annual results included a one-time gain on the sale of assets of $4.1 million, $0.09 per share, while the 2001 results included two non-recurring items totaling $18.6 million or $0.45 per share. Operating profit per ton shipped for the year was $17, compared to $16 per ton in 2001. Fourth quarter net income was $12.8 million. Net income attributable to common shareholders was $10.0 million, $0.19 per diluted share, a significant improvement over the $15.5 million loss ($0.38 per diluted share) reported last year. Sales for the quarter were $256.1 million, up $33.6 million or 15% over the fourth quarter of 2001. "While IPSCO had record sales and production levels, and continued to enjoy solid market penetration as a result of our newer facilities in the United States, we were disappointed with our profitability," said David Sutherland, President and Chief Executive Officer. "Demand for our plate products was adversely affected by soft market conditions in the industrial markets we serve, and low drilling rates throughout North America hurt sales and earnings for tubular products, most notably oil country tubular goods in Canada." Record annual sales volume of 2,896,900 tons exceeded 2001 shipments by 19%. Sales of steel mill products, comprising hot rolled coil, cut plate and discrete plate, totaled 2,115,000 tons. The 35% improvement over 2001 reflected the first full year of operation for the Mobile Steelworks. Sales volume for tubular products, which include standard pipe, hollow structurals, and energy related tubular products, fell by 11%. 1 Liquid steel production for the year 2002, which included a full year's output from all three IPSCO steelworks, reached a record 3,007,700 tons, almost 25% higher than in 2001. Sales volume for the fourth quarter totaled 638,700 tons, up 6% over the fourth quarter of 2001. Quarterly sales of steel mill products were 461,400 tons, 16% higher than in the fourth quarter of 2001. Tubular product sales of 177,300 tons in the fourth quarter were down 15% from the year earlier period. The outlook for overall product demand is one filled with considerable uncertainty based on market trends. Extremely soft conditions in the industrial markets we serve continue to depress steel mill product sales volume and pricing. Any change in this outlook for IPSCO's industrial markets would require an improvement in the overall economy. In addition, recent scrap market trends are resulting in cost increases. Consequently, the consensus of analysts' estimates of first quarter 2003 results is significantly higher than current conditions would warrant. While IPSCO expects to be profitable in the first quarter, the level will be heavily dependent on the performance of the energy tubular sector. For further information on IPSCO, please visit the company's web site at WWW.IPSCO.COM. THIS NEWS RELEASE CONTAINS FORWARD-LOOKING INFORMATION WITH RESPECT TO IPSCO'S OPERATIONS AND BELIEFS. ACTUAL RESULTS MAY DIFFER FROM THESE FORWARD LOOKING STATEMENTS DUE TO NUMEROUS FACTORS, INCLUDING WEATHER CONDITIONS, DRILLING RIG AVAILABILITY, DEMAND FOR OIL AND GAS, ENERGY COSTS, DEMAND FOR AND PRICES FOR PRODUCTS PRODUCED BY THE COMPANY, AND GENERAL ECONOMIC TRENDS. THESE AND OTHER FACTORS ARE OUTLINED IN IPSCO'S REGULATORY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THOSE ON IPSCO'S ANNUAL REPORT FOR 2001, ITS MD&A, PARTICULARLY AS DISCUSSED UNDER THE HEADING "BUSINESS RISKS AND UNCERTAINTIES", AND FORM 40-F. Company Contact: Bob Ratliff Vice President and Chief Financial Officer IPSCO Tel. (630) 810-4769 Release #03-06 # # # 2 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ================================================================================ (thousands of United States Dollars except for share, per share, ton and per ton data)
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED ========================================== ============================== DECEMBER 31 DECEMBER 31 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 2002 2001 2002 2002 2001 =================================================================================================================================== Coil and Plate Tons Produced (thousands) 662.7 606.1 690.9 2,783.2 2,238.2 =================================================================================================================================== Finished Tons Shipped (thousands) 638.7 604.8 697.8 2,896.9 2,435.1 =================================================================================================================================== Sales $ 256,083 $ 222,464 $ 266,908 $ 1,081,709 $ 903,743 Cost of sales Manufacturing and raw material 212,190 196,082 225,885 925,343 770,788 Amortization of capital assets 11,833 11,119 13,737 51,049 37,107 -------------------------------------------------------------------------- 224,023 207,201 239,622 976,392 807,895 -------------------------------------------------------------------------- Gross income 32,060 15,263 27,286 105,317 95,848 Selling, research and administration 12,810 17,319 13,942 55,155 57,527 -------------------------------------------------------------------------- Operating income (loss) 19,250 (2,056) 13,344 50,162 38,321 Other expenses (income): Non-recurring items (6,464) 10,000 -- (6,464) (29,000) Interest on long-term debt 5,852 6,404 5,726 23,821 6,634 Other interest (income) expense, net (8) 106 (43) 174 (928) Foreign exchange loss (gain) (179) 1,160 1,560 938 882 -------------------------------------------------------------------------- Income (Loss) Before Income Taxes 20,049 (19,726) 6,101 31,693 60,733 Income Tax Expense (Benefit) 7,218 (7,101) 2,197 11,414 21,865 -------------------------------------------------------------------------- Net Income (Loss) 12,831 (12,625) 3,904 20,279 38,868 Dividends on Preferred Shares, including part VI.I tax 1,402 1,395 1,408 5,608 5,692 Interest on Subordinated Notes, net of income tax 1,442 1,444 1,443 5,771 5,771 -------------------------------------------------------------------------- Net Income (Loss) Attributable to Common Shareholders $ 9,987 $ (15,464) $ 1,053 $ 8,900 $ 27,405 =================================================================================================================================== Earnings (Loss) Per Common Share- Basic $ 0.21 $ (0.38) $ 0.02 $ 0.19 $ 0.67 - Diluted $ 0.19 $ (0.38) $ 0.02 $ 0.19 $ 0.66 Number of Common Shares Outstanding (thousands) 47,677 40,844 47,542 47,677 40,844 Annualized Return on Common Shareholders' Equity 5% -8% 0% 1% 4% Operating Income (Loss) Per Ton $ 30 $ (3) $ 19 $ 17 $ 16 ===================================================================================================================================
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) ================================================================================ (thousands of United States Dollars)
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED ========================================== ============================== DECEMBER 31 DECEMBER 31 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 2002 2001 2002 2002 2001 =================================================================================================================================== Retained Earnings at Beginning of Period $ 486,132 $ 508,533 $ 486,589 $ 491,777 $ 475,551 Net Income (Loss) 12,831 (12,625) 3,904 20,279 38,868 Dividends on Preferred Shares, including part VI.I tax (1,402) (1,395) (1,408) (5,608) (5,692) Interest on Subordinated Notes, net of income tax (1,442) (1,444) (1,443) (5,771) (5,771) Dividends on Common Shares (1,520) (1,292) (1,510) (6,078) (11,179) ------------------------------------------------------------------------ Retained Earnings at End of Period $ 494,599 $ 491,777 $ 486,132 $ 494,599 $ 491,777 ===================================================================================================================================
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. The consolidated interim financial statements are unaudited and are based on Canadian generally accepted accounting principles and practices consistent with those used in the preparation of the annual financial statements. 2. Certain prior period amounts have been reclassified to conform with the current presentation. 3. The company sold certain of its assets held for sale in the fourth quarter 2002 resulting in a gain of $6,464. The effect on basic earnings per common share was an increase in each of the fourth quarter 2002 and year 2002 of $0.09. 4. The company settled the litigation with the turnkey contractors of the Montpelier Steelworks during the three month period ended June 30, 2001. As a result of the $49 million settlement, the company recorded income of approximately $39 million representing claims for lost business and reimbursement of legal costs and approximately $10 million was recorded to cover the cost of capital asset improvements. The effect of the settlement on basic earnings per common share was an increase of $0.61 in the second quarter ended June 30 and year ended December 31, 2001. The company recorded a $10 million write-down of assets held for sale in the fourth quarter 2001 to reflect their most recent valuation. The effect of the write-down on basic earnings per common share was a decrease of $0.16 in the fourth quarter and year ended December 31, 2001. 3 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ================================================================================ (thousands of United States Dollars)
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED ========================================== ============================== DECEMBER 31 DECEMBER 31 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 2002 2001 2002 2002 2001 =================================================================================================================================== Cash Derived From (Applied To) Operating Activities Working capital provided by operations $ 18,374 $ (21,292) $ 13,184 $ 72,397 $ 57,766 Change in non-cash operating working capital (50,013) 39,469 (5,135) (59,795) 50,557 ------------------------------------------------------------------------ (31,639) 18,177 8,049 12,602 108,323 =================================================================================================================================== Financing Activities Common share dividends (1,520) (1,292) (1,510) (6,078) (11,179) Issue of common shares (net of issue costs) - - - 90,670 - Common shares issued pursuant to share option plan 1,011 32 113 2,953 391 Preferred share dividends (1,315) (1,296) (1,314) (5,254) (5,337) Subordinated notes interest - - (4,250) (8,500) (8,500) Proceeds from sale-leaseback of capital assets - - - - 15,000 Issue of long-term debt 38,300 25,000 10,000 83,300 120,000 Repayment of long-term debt (3,300) (12,000) (6,100) (114,400) (73,100) ------------------------------------------------------------------------ 33,176 10,444 (3,061) 42,691 37,275 =================================================================================================================================== Investing Activities Expenditures for capital assets (3,895) (14,311) (6,767) (34,211) (155,775) Proceeds on sale of assets held for sale 1,466 - - 1,466 - Other - - - (1,706) (1,993) ------------------------------------------------------------------------ (2,429) (14,311) (6,767) (34,451) (157,768) =================================================================================================================================== Effect of exchange rate changes on cash and cash equivalents 407 716 (854) (475) (3,489) =================================================================================================================================== Increase (Decrease) in Cash and Cash Equivalents less Bank Indebtedness (485) $ 15,026 (2,633) 20,367 (15,659) Cash and Cash Equivalents less Bank Indebtedness at Beginning oo Period 23,344 (12,534) 25,977 2,492 18,151 =================================================================================================================================== Cash and Cash Equivalents less Bank Indebtedness at End of Period $ 22,859 $ 2,492 $ 23,344 $ 22,859 $ 2,492 ===================================================================================================================================
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ================================================================================ (thousands of United States Dollars)
DECEMBER 31 DECEMBER 31 2002 2001 (UNAUDITED) =================================================================================================== Current Assets Cash and cash equivalents $ 22,859 $ 37,492 Accounts receivable, less allowance 153,752 116,708 Inventories 255,410 239,394 Other 2,847 2,031 Future income taxes 41,402 44,490 --------------------------- 476,270 440,115 =================================================================================================== Non-Current Assets Capital and other 1,146,456 1,157,927 Future income taxes 121,586 126,123 --------------------------- 1,268,042 1,284,050 =================================================================================================== Total Assets $ 1,744,312 $ 1,724,165 =================================================================================================== Current Liabilities Bank indebtedness $ - $ 35,000 Accounts payable and accrued charges 136,072 150,705 Income and other taxes payable - 2,111 Current portion of long-term debt 35,386 21,100 --------------------------- 171,458 208,916 =================================================================================================== Long-Term Liabilities Long-term debt 342,202 386,809 Deferred pension liability - 234 Future income taxes 143,229 142,668 --------------------------- 485,431 529,711 =================================================================================================== Shareholders' Equity Preferred shares 98,553 98,545 Common shares 351,311 256,163 Subordinated notes 104,250 104,250 Retained earnings 494,599 491,777 Cumulative translation adjustment 38,710 34,803 --------------------------- 1,087,423 985,538 =================================================================================================== Total Liabilities and Shareholders' Equity $ 1,744,312 $1,724,165 =================================================================================================== Ratio of Current Assets to Current Liabilities 2.8 : 1 2.1 : 1 ===================================================================================================
4 TONS SHIPPED BY QUARTER ================================================================================ (thousands)
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED ========================================== ============================== DECEMBER 31 DECEMBER 31 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 2002 2001 2002 2002 2001 =================================================================================================================================== Coil and Discrete Plate 341.7 288.1 383.6 1,542.9 1,071.2 Cut Plate 119.7 108.0 142.4 572.1 489.7 ----------------------------------------------------------------------- Total Steel Mill Products 461.4 396.1 526.0 2,115.0 1,560.9 =================================================================================================================================== Energy Tubulars 105.3 120.0 91.9 381.4 445.0 Large Diameter Tubulars 15.0 23.2 15.0 129.3 134.4 Non-Energy Tubulars 57.0 65.5 64.9 271.2 294.8 ----------------------------------------------------------------------- Total Tubular Products 177.3 208.7 171.8 781.9 874.2 =================================================================================================================================== Total Shipments 638.7 604.8 697.8 2,896.9 2,435.1 ===================================================================================================================================
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