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Mechel Reports Record Results for 2006 Full Year Period
MOSCOW, June 28 /PRNewswire/ --
- Revenues increased 15.6% to US$4.4 billion -
- Operating income increased 40.7% to US$725.7 million -
- Net income increased 58.3% to US$603.2 million, or US$4.41 per ADR
(US$1.47 per diluted share) -
- Announces expansion of capital investment program -
Mechel OAO (NYSE: MTL), a leading Russian integrated mining and steel
group, today announced results for the full year, ended December 31, 2006.
-- Record consolidated financial results
-- Significant improvement in steel segment performance
-- Revised investment program
US$ thousand FY 2006 FY 2005 Change
Y-on-Y
Revenues 4,397,811 3,804,995 15.6%
Net operating income 725,698 515,728 40.7%
Net operating margin 16.5% 13.6% -
Net income 603,249 381,180 58.3%
EBITDA (1) 1,068,258 726,252 47.1%
EBITDA margin 24.3% 19.1% -
(1) See Attachment A.
Alexey Ivanushkin, Mechel's Chief Operating Officer, commented: "The past
year was the best in Mechel's history, as we continued our steady development
of the Company, guided by our strategy of increasing mining segment output
and raising profitability of our steel segment operations. The investment
projects implemented to date started to bear fruit, as reflected in the
Company's performance. Backed by predominantly positive trends in key markets
and the actions we have taken to improve our operations, Mechel has achieved
record financial results. Also, our results for the year once again
demonstrate the advantages of Mechel's integrated structure and diversified
operations that combine mining and steel production assets, which enabled the
Company to capitalize on positive trends in pricing for metals products while
offsetting unfavorable pricing dynamics in coal markets during 2006."
Consolidated Results
Net revenue in 2006 rose by 15.6% to US$4.4 billion from US$3.8 billion
in 2005. Operating income rose 40.7% to US$725.7 million, or 16.5% of net
revenue, compared to operating income of US$515.7 million, or 13.6% of net
revenue in 2005.
For 2006, Mechel reported consolidated net income of US$603.2 million, or
US$4.41 per ADR (US$1.47 per diluted share), an increase of 58.3% over
consolidated net income of US$381.2 million, or US$2.85 per ADR (US$0.95 per
diluted share), in 2005.
Consolidated EBITDA rose 47.1% to US$1.1 billion in 2006, compared to
US$726.3 million a year ago, reflecting the positive impact of favorable
market conditions and the Company's commitment to expense management, along
with the return on investments aimed at increasing operational performance of
Mechel's subsidiaries.
Mining Segment Results
US$ thousand 2006 2005 Change
Y-on-Y
Revenues from
external customers 1,336,142 1,094,782 22.0%
Operating income 321,962 401,252 (19.8)%
Net income 196,801 313,736 (37.3)%
EBITDA 408,139 465,710 (12.4)%
EBITDA margin (2) 23.8% 32.5% -
(2) EBITDA margin is calculated out of consolidated revenues of the
segment, including intersegment sales.
Mining Segment Output
Product FY 2006, thousand tonnes FY 2006 vs. FY 2005
Coal 17,013 9%
Coking coal 9,697 13%
Steam coal 7,316 4%
Iron ore concentrate 4,976 10%
Nickel 14.4 14%
Mining segment revenue for 2006 totaled US$1.3 billion, or 30.4% of
consolidated net revenue, an increase of 22.0% over segment revenue of US$1.1
billion, or 28.8% of consolidated net revenue, in 2005. The increase in
revenue reflects production growth, strong market positions in coal, and
large-scale sales of mining products to third parties.
Operating income in the mining segment in 2006 decreased by 19.8% to
US$322.0 million, or 24.1% of total sales to third parties, compared to
operating income of US$401.3 million, or 36.7% of total sales to third
parties a year ago. EBITDA in the mining segment in 2006 was US$408.1 million
compared to EBITDA of US$465.7 million in 2005. The EBITDA margin of the
mining segment was 23.8% for the 2006 full year period, versus 32.5% in 2005.
As previously announced, results for the mining segment in 2006 include a
nonrecurring charge related to mineral extraction tax claimed from the
Company's Korshunov Mining Plant for the period of 2002-2005.
Alexey Ivanushkin commented on the results of the mining segment:
"Throughout the year we have steadily executed on our strategy targeted at
expanding our mining segment and securing Mechel's position as one of
Russia's leading mining companies. Market conditions for coal products in
2006 were not quite as favorable versus the previous year, in which we
experienced high demand and pricing levels. While pricing levels were lower
than those seen a year ago, this was offset in part by the increased
production volumes of coal, nickel, and iron ore concentrate we managed to
achieve at all of our subsidiaries. Starting from the second half of 2006,
prices for our mining segment products were on the rise, generating an EBITDA
margin for the segment of 29.8% in the fourth quarter. Based on the current
favorable pricing environment and current outlook, we are positive regarding
the prospects of our mining subsidiaries and will maximize our profit by
further increasing production volumes and controlling costs."
Steel Segment Results
US$ thousand 2006 2005 Change
Y-on-Y
Revenues from
external customers 3,061,669 2,710,213 13.0%
Operating income 403,737 114,475 252.7%
Net income 406,448 67,443 502.7%
EBITDA 660,119 260,542 153.4%
EBITDA margin (2) 21.4% 9.4% -
(2) EBITDA margin is calculated out of consolidated revenues of the
segment, including intersegment sales.
Steel Segment Output
Product FY 2006, thousand tonnes FY 2006 vs. FY 2005
Coke 2,570 (1)%
Pig iron 3,631 8%
Steel 5,950 1%
Rolled products 4,714 2%
Hardware 611 10%
Revenue from Mechel's steel segment increased 13% in 2006 to US$3.1
billion, or 69.6% of consolidated net revenue, from US$2.7 billion, or 71.2%
of consolidated net revenue, in 2005.
For the 2006 full year period, operating income of the steel segment
increased 252.7% to US$403.7 million, or 13.2% of sales to third parties,
compared to operating income of US$114.5 million, or 4.2% of sales to third
parties, in the 2005 full year period. EBITDA in the steel segment for 2006
was US$660.1 million, an increase of 153.4% over segment EBITDA of US$260.5
million in 2005. The EBITDA margin of the steel segment was 21.4% in 2006
compared to 9.4% in 2005.
Alexey Ivanushkin commented, "2006 marked record financial results and
profitability levels for our steel segment, clearly demonstrating the
progress we have made in implementing our strategy of enhancing production
efficiency and reducing operating costs, as the investment projects we have
implemented to date started to yield results. The performance of our steel
segment also benefited from a favorable pricing environment, especially in
growing rebar market. During the year, we leveraged our position as the
second largest Russian producer of long products, steadily increasing sales
in the domestic market, which carries a premium to export prices, as domestic
demand continued to strengthen. Going forward we remain committed to
increasing profitability and reducing costs while further developing our
steel production capabilities."
Recent Highlights
-- In December of 2006, Mechel announced the commissioning of a new
continuous casting machine at its subsidiary, Chelyabinsk
Metallurgical Plant, with the annual capacity of over 1 million tonnes
of billets. The new continuous caster will allow Mechel to
significantly reduce its production costs and improve the quality of
long products.
-- Through a series of private transactions and public offerings, Igor
Zyuzin increased his stake in Mechel to 68.2% as of December 31, 2006.
These transactions were carried out in full accordance with the
agreement between core shareholders regarding Mr. Zyuzin's acquisition
of Vladimir Iorich's stake in Mechel OAO.
-- In January of 2007, Mechel announced the early closure of the
privatization contract for its Romanian steel plant, Mechel
Targoviste, having completely met all its investment obligations under
this contract.
-- In March of 2007, Mechel announced the commissioning of a new
continuous casting machine at its Romanian steel plant Mechel
Targoviste. The investments in the continuous caster reconstruction
and infrastructure amounted to approximately US$14.0 million. The new
unit will allow Mechel Targoviste to significantly reduce production
costs and improve the quality of its long products.
-- In March of 2007, Mechel announced the acquisition of a controlling
stake of 93.35% of Southern Kuzbass Power Plant OAO. The transaction
amount totaled approximately US$265.0 million. The acquisition of
Southern Kuzbass Power Plant was in line with Mechel's strategy to
further develop its mining segment.
-- In April of 2007, Mechel announced the early completion of its
obligations under the privatization contract for its Romanian steel
plant, Mechel Campia Turzii, having completely met all its investment
obligations under this contract.
-- In May of 2007, Mechel announced the commissioning of a new berthing
wall and warehouse areas at its subsidiary, Trade Port Posiet OAO. The
commissioning will enable the port to accept and handle 40,000-tonne
Handymax class ships as early as this year.
-- In May of 2007, Mechel announced the acquisition of a 49% stake of
Kuzbass Power Sales Company OAO. The transaction amount totaled
approximately US$44.0 million. Together with 1.2% of the shares owned
by Mechel previously, its stake in Kuzbass Power Sales Company has
increased to 50.2%.
-- In June of 2007 Mechel announced an agreement with Danieli to provide
for the modernization of Mechel's steel operations. The agreement
between Mechel and Danieli, will include the re-equipment of CMP's
electric arc furnace No.6 with fundamental modernization of its
continuous caster to multiply its productivity by 3.5 - 4 times, to
1.2 million tonnes of slabs annually.
Capital Investment Program
Alexey Ivanushkin added: "Investment activities in recent years have
allowed Mechel to boost production volumes and increase the profitability of
its operations. Based on our extensive experience, we have conducted a
thorough analysis of the Company's investment capabilities and have decided
to expand our investment program for 2007-2011 in both the mining and steel
segments. In both segments the Company will focus on developing projects that
will allow Mechel to generate steady operational results, increase
value-added product output, and improve its production effectiveness."
Total capital investment in 2007-2011 is expected to be approximately
US$2.7 billion.
About US$1.2 billion of this will be invested in the mining segment, with
the goal of increasing annual coal output to 25.0 million tonnes by 2010.
About US$700.0 million of this amount will be invested in Southern Kuzbass
towards construction of new mines: Erunakovskaya-1, Sibirginskaya (Extension
2), Olzherasskaya-Glubokaya; and implementation of cost cutting measures in
mining, transportation, and coal washing.
About US$300.0 million will be invested in technical upgrades of the
Southern Urals Nickel Plant which will allow it to increase its output to 24
thousand tonnes while reducing production costs.
The remaining US$1.5 billion of the capital investment program is planned
for development of Mechel's steel subsidiaries. About US$1.3 billion will be
invested in the further modernization of Chelyabinsk Metallurgical Plant.
These investments will allow the plant to double its volumes of continuously
cast steel billets, reduce billet sales to third parties, and extend its
construction and engineering rolled products mix. The investment plan also
provides for reconstruction of existing hot and cold rolling facilities,
including the increase of stainless steel flat rolled products output.
Investments in the modernization of Izhstal will total about US$140.0
million, and will be channeled to the plant's technical re-equipment program,
comprised of fundamental modernization of its steel melting operations and a
reconstruction of its long product rolling facilities.
In order to increase its exports to Asian Pacific countries, Mechel plans
a reconstruction of Port Posiet that will require about US$70.0 million.
Following the expansion, Posiet will increase its annual throughput to 5
million tonnes, and will be capable of accepting and handling 60,000-tonne
Panamax class ships.
The rest of the capital investments in the steel segment will be made in
Korshunov Mining Plant (US$90.0 million), Beloretsk Metallurgical Plant
(US$60.0 million), Mechel Campia Turzii (US$30.0 million), Mechel Targoviste
(US$25.0 million), Mechel Nemunas (US$10.0 million), and Urals Stampings
Plant (US$10.0 million).
Alexey Ivanushkin concluded, "Our new investment program will secure
Mechel's position as one of the leading Russian mining and steel companies,
and support the next phase of the Company's growth. The investments planned
for modernization and expansion will enable Mechel to increase profitability
of its operations and enter new markets, while providing for additional
organic growth opportunities and enhancing profitability and shareholder
value. On the whole, looking back at the year 2006, we are very pleased with
our results, which further support the advantages of Mechel's well-balanced
model combining coal mining and steel production. Given the results of our
operations and the trends observed in our key markets thus far in 2007, we
believe that Mechel's is well positioned to benefit from the positive demand
environment throughout 2007."
Financial Position
Cash expenditure on property, plant and equipment and acquisition of
mineral licenses for the 2006 full year amounted to US$397.8 million, of
which US$234.0 million was invested in the mining segment and US$154.0
million in the steel segment.
For the 2006 full year, Mechel spent US$162.6 million on acquisitions,
comprised of US$156.5 million spent on acquisition of Moscow Coke and Gas
Plant OAO and US$4.0 million spent on the acquisition of minority interest in
other subsidiaries.
As of December 31, 2006 total debt was at US$489.1 million. Cash and cash
equivalents amounted to US$172.6 million at the end of the year 2006 and net
debt amounted to US$316.5 million (net debt is defined as total debt
outstanding less cash and cash equivalents).
The management of Mechel will host a conference call today at 6:00 p.m.
Moscow time (10:00 a.m. New York time, 3:00 p.m. London time) to review
Mechel's financial results and comment on current operations. The call may be
accessed via the Internet at http://www.mechel.com, under the Investor
Relations section.
Mechel is one of the leading Russian mining and metals companies. Mechel
unites producers of coal, iron ore, nickel, steel, rolled products, and
hardware. Mechel products are marketed domestically and internationally.
Some of the information in this press release may contain projections or
other forward-looking statements regarding future events or the future
financial performance of Mechel, as defined in the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution
you that these statements are only predictions and that actual events or
results may differ materially. We do not intend to update these statements.
We refer you to the documents Mechel files from time to time with the U.S.
Securities and Exchange Commission, including our Form 20-F. These documents
contain and identify important factors, including those contained in the
section captioned "Risk Factors" and "Cautionary Note Regarding
Forward-Looking Statements" in our Form 20-F, that could cause the actual
results to differ materially from those contained in our projections or
forward-looking statements, including, among others, the achievement of
anticipated levels of profitability, growth, cost and synergy of our recent
acquisitions, the impact of competitive pricing, the ability to obtain
necessary regulatory approvals and licenses, the impact of developments in
the Russian economic, political and legal environment, volatility in stock
markets or in the price of our shares or ADRs, financial risk management and
the impact of general business and global economic conditions.
Attachments to the FY 2006 Earnings Press Release
Attachment A
Non-GAAP financial measures. This press release includes financial
information prepared in accordance with accounting principles generally
accepted in the United States of America, or US GAAP, as well as other
financial measures referred to as non-GAAP. The non-GAAP financial measures
should be considered in addition to, but not as a substitute for, the
information prepared in accordance with US GAAP.
Earnings Before Interest, Depreciation and Amortization (EBITDA) and
EBITDA margin. EBITDA represents earnings before interest, depreciation and
amortization. EBITDA margin is defined as EBITDA as a percentage of our net
revenues. Our EBITDA may not be similar to EBITDA measures of other
companies; is not a measurement under accounting principles generally
accepted in the United States and should be considered in addition to, but
not as a substitute for, the information contained in our consolidated
statement of operations. We believe that EBITDA provides useful information
to investors because it is an indicator of the strength and performance of
our ongoing business operations, including our ability to fund discretionary
spending such as capital expenditures, acquisitions and other investments and
our ability to incur and service debt. While interest, depreciation and
amortization are considered operating costs under generally accepted
accounting principles, these expenses primarily represent the non-cash
current period allocation of costs associated with long-lived assets acquired
or constructed in prior periods. Our EBITDA calculation is commonly used as
one of the bases for investors, analysts and credit rating agencies to
evaluate and compare the periodic and future operating performance and value
of companies within the metals and mining industry. EBITDA can be reconciled
to our consolidated statements of operations as follows:
US$ thousands 2006 2005
Net income 603,249 381,180
Add:
Depreciation, depletion and
amortization 196,227 167,600
Interest expense 38,183 40,829
Income taxes 230,599 136,643
Consolidated EBITDA 1,068,258 726,252
EBITDA margin can be reconciled as a percentage to our Revenues as
follows:
US$ thousands 2006 2005
Revenue, net 4,397,811 3,804,995
EBITDA 1,068,258 726,252
EBITDA margin 24.3% 19.1%
Consolidated Balance Sheets
(in thousands of U.S. dollars, except share amounts)
December 31, December 31,
2006 2005
Assets
Cash and cash equivalents $ 172,614 $ 311,775
Trading securities 270,964
Accounts receivable, net of allowance for
doubtful accounts of $19,592 in 2006
and $17,509 in 2005 191,172 140,649
Due from related parties 545 4,455
Inventories 653,079 496,658
Deferred cost of inventory in transit 14,125 49,893
Current assets of discontinued operations 9 88
Deferred income taxes 7,922 8,965
Prepayments and other current assets 324,600 347,000
Total current assets 1,635,030 1,359,483
Long-term investments in related parties 429,206 408,708
Other long-term investments 44,392 16,148
Non-current assets of discontinued
operations 108 97
Intangible assets, net 4,746 7,590
Property, plant and equipment, net 2,012,828 1,508,984
Mineral licenses, net 269,851 242,006
Deferred income taxes 6,983 17,487
Goodwill 45,914 39,580
Total assets $ 4,449,058 $ 3,600,083
Liabilities and Shareholders' Equity
Short-term borrowings and current portion
of long-term debt $ 166,517 $ 389,411
Accounts payable and accrued expenses:
Advances received 88,278 47,369
Accrued expenses and other current
liabilities 84,632 79,405
Taxes and social charges payable 143,037 144,715
Trade payable to vendors of goods and
services 183,485 210,228
Due to related parties 2,353 2,935
Current liabilities of discontinued
operations 508 109
Asset retirement obligation, current
portion 3,444 4,236
Deferred income taxes 58,820 26,557
Deferred revenue 7,183 55,267
Pension obligations, current portion 11,044 8,189
Finance lease liabilities, current portion 6,066 887
Total current liabilities 755,367 969,308
Long-term debt, net of current portion 322,604 45,615
Restructured taxes and social charges
payable, net of current portion 7,782 33,866
Asset retirement obligations, net of
current portion 88,914 54,816
Pension obligations, net of current portion 59,170 43,510
Deferred income taxes 136,154 105,481
Finance lease liabilities, net of current
portion 51,068 9,179
Commitments and contingencies
Minority interests 163,036 127,834
Shareholders' Equity
Common shares (10 Russian rubles par value;
497,969,086 shares authorized, 416,270,745
shares issued and 416,270,745 and
403,118,680 shares outstanding as of
December 31, 2006 and 2005) 133,507 133,507
Treasury shares, at cost (13,152,065 common
shares as of December 31, 2005) - (4,187)
Additional paid-in capital 412,327 321,864
Accumulated other comprehensive income 188,218 42,046
Retained earnings 2,130,911 1,717,244
Total shareholders' equity 2,864,963 2,210,474
Total liabilities and shareholders' equity $ 4,449,058 $ 3,600,083
Consolidated Income Statements
(in thousands of U.S. dollars, except
share and per share amounts)
Year ended December 31,
2006 2005 2004
Revenue, net (including related
party amounts of $66,998, $65,431
and $68,806 during 2006, 2005
and 2004, respectively) $ 4,397,811 $ 3,804,995 $ 3,635,955
Cost of goods sold (including
related party amounts of
$142,959, $73,829 and $12,334
during 2006, 2005
and 2004, respectively) (2,868,564) (2,469,134) (2,225,088)
Gross profit 1,529,247 1,335,861 1,410,867
Selling, distribution and
operating expenses:
Selling and distribution expenses (418,901) (450,238) (367,514)
Taxes other than income tax (82,140) (90,683) (69,285)
Accretion expense (7,433) (3,248) (2,081)
Loss on write-off of property,
plant and equipment (2,418) (12,667) -
(Provision for) recovery of
doubtful accounts (2,722) (3,569) 7,859
General, administrative and
other operating expenses (289,935) (259,728) (229,039)
Total selling, distribution and
operating expenses (803,549) (820,133) (660,060)
Operating income 725,698 515,728 750,807
Other income and (expense):
(Loss) income from equity
investments (9,858) 12,426 4,621
Interest income 8,314 10,049 2,375
Interest expense (38,183) (40,829) (51,409)
Gain on revaluation of trading
securities 50,688 - -
Other income, net 69,401 65,920 836,817
Foreign exchange gain (loss) 58,773 (37,435) 1,884
Total other income and
(expense), net 139,135 10,131 794,288
Income before income tax,
minority interest, discontinued
operations and extraordinary gain 864,833 525,859 1,545,095
Income tax expense (230,599) (136,643) (175,776)
Minority interest in income of
subsidiaries (31,528) (6,879) (11,673)
Income from continuing operations 602,706 382,337 1,357,646
Income (loss) from discontinued
operations, net of tax 543 (1,157) (15,211)
Extraordinary gain, net of tax - - 271
Net income $ 603,249 $ 381,180 $ 1,342,706
Currency translation adjustment 148,920 (53,822) 49,116
Adjustment of available-for-sale
securities 11,203 2,181 (2,350)
Additional minimum pension
liability (4,669) - -
Comprehensive income $ 758,703 $ 329,539 $ 1,389,472
Basic and diluted earnings per share:
Earnings per share from
continuing operations $ 1.48 $ 0.95 $ 3.63
Loss per share effect of
discontinued operations (0.00) (0.00) (0.04)
Earnings per share effect of
extraordinary gain 0.00 0.00 0.00
Net income per share $ 1.48 $ 0.95 $ 3.59
Weighted average number of
shares outstanding $ 408,979,356 $403,118,680 $373,971,312
Consolidated Statements of Cash Flows
(in thousands of U.S. dollars) Year ended December 31,
2006 2005 2004
Cash Flows from Operating
Activities
Net income $ 603,249 $ 381,180 $ 1,342,706
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 177,303 147,117 120,444
Depletion and amortization 18,924 20,483 17,376
Foreign exchange (gain) loss (58,773) 37,435 (1,884)
Deferred income taxes 22,299 (12,535) (11,217)
Provision for (recovery of)
doubtful accounts 2,722 3,569 (7,859)
Inventory write-down 525 5,938 2,183
Accretion expense 7,433 3,248 2,081
Loss on write-off of property,
plant and equipment 2,418 12,667 -
Minority interest 31,528 6,879 11,673
Gain on revaluation of trading
securities (50,688) - -
Change in undistributed earnings
of equity investments 17,426 (10,426) (4,621)
Non-cash interest on long-term
tax and pension liabilities 6,173 13,749 11,425
Loss on sale of property, plant
and equipment 1,320 1,801 5,736
Loss (gain) on sale of long-term
investments 5,047 (2,743) (803,405)
Gain on discharged asset
retirement obligations (2,112) - -
(Income) loss from discontinued
operations (543) 1,157 15,211
Gain on accounts payable with
expired legal term (843) (23,347) (1,250)
Gain on forgiveness of fines and
penalties (69,767) (38,383) (18,296)
Stock-based compensation expense 260 - 1,400
Amortization of capitalized
costs on bonds issue 673 1,553 1,525
Pension service cost and
amortization of prior year
service cost 3,510 2,511 2,187
Extraordinary gain - - (271)
Net change before changes in
working capital 718,084 551,853 685,144
Changes in working capital
items, net of effects from
acquisition of new subsidiaries:
Accounts receivable (9,004) 23,602 (2,831)
Inventories (159,103) 14,614 (170,726)
Trade payable to vendors of
goods and services (47,940) 60,087 (1,305)
Advances received 35,128 (46,269) 4,902
Accrued taxes and other
liabilities 24,715 14,868 4,176
Settlements with related parties 3,430 12,658 1,253
Current assets and liabilities
of discontinued operations (187) 57 (4,134)
Deferred revenue and cost of
inventory in transit, net (12,316) 4,624 (22,607)
Other current assets 2,116 (15,219) (197,735)
Net cash provided by
operating activities 554,923 620,875 296,137
Cash Flows from Investing Activities
Acquisition of subsidiaries,
less cash acquired (2,153) (3,497) -
Acquisition of minority interest
in subsidiaries (4,016) (73,936) (37,021)
Acquisition of Moscow Coke and
Gas Plant (156,474) - -
Investment in Yakutugol - (411,182) -
Acquisition of Izhstal - - (22,742)
Acquisition of Port Posiet - - (29,966)
Acquisition of Kaslinsky
Architectural Casting Plant - - (996)
Investments in other
non-marketable securities (2,016) (7,554) (29,762)
Proceeds from disposal of
non-marketable equity securities 6,507 19,388 875,967
Proceeds from disposals of
property, plant and equipment 3,456 2,628 3,647
Purchases of mineral licenses (6,382) (93,033) -
Purchases of property, plant and
equipment (391,460) (427,521) (303,411)
Net cash (used in) provided by
investing activities (552,538) (994,707) 455,716
Cash Flows from Financing Activities
Proceeds from short-term
borrowings 883,307 1,577,984 954,733
Repayment of short-term
borrowings (1,116,762) (1,686,578) (941,340)
Dividends paid (189,583) (194,154) (5,145)
Proceeds from issuance of
common stock - - 220,873
Purchase of treasury stock (36,449) - -
Proceeds from disposal of
treasury stock 1,248 - -
Proceeds from long-term debt 415,345 14,815 75,241
Repayment of long-term debt (110,840) (20,180) (52,093)
Repayment of obligations under
finance lease (9,048) (757) -
Net cash (used in) provided by
financing activities (162,782) (308,870) 252,269
Effect of exchange rate changes
on cash and cash equivalents 21,236 (30,284) 1,360
Net (decrease) increase in cash
and cash equivalents (139,161) (712,986) 1,005,482
Cash and cash equivalents at
beginning of year 311,775 1,024,761 19,279
Cash and cash equivalents at
end of year $ 172,614 $ 311,775 $ 1,024,761
Supplementary cash flow information:
Interest paid, net of amount
capitalized $ (38,882) $ (43,354) $ (62,835)
Income taxes paid $ (196,913) $ (171,774) $ (136,473)
Non-cash Activities:
Net assets of subsidiaries
contributed by minority
shareholders in exchange for
shares issued by subsidiaries $ 9,641 $ 17,460 $ 340
Acquisition of plant and
equipment in exchange
for goods $ - $ - $ 3,071
Acquisition of equipment
under finance lease $ 46,855 $ 10,291 $ -
Conversion of debt into
shares of subsidiaries $ 20,482 $ 25,595 $ -
Treasury shares issued to
acquire subsidiary $ 119,950 $ - $ 9,723
Web site: http://www.mechel.com
