ISG Reports Record Fourth-Quarter and Year 2004 Results

ISG Reports Record Fourth-Quarter and Year 2004 Results
Results Summary ($ in millions, except per ton and per share amounts)




RICHFIELD, Ohio, Feb. 9  /PRNewswire-FirstCall/ -- International Steel Group
Inc. (NYSE:ISG) today reported fourth-quarter 2004 net income of $606.0 million
($5.87 per diluted share) and net income of $1,027.4 million ($9.99 per diluted
share) for the year ended December 31, 2004.  The fourth quarter and year
include an unusual income tax benefit of about $390 million ($3.78 per diluted
share).

Excluding this unusual income tax benefit, net income was $216.1 million ($2.10
per diluted share) and $637.5 million ($6.20 per diluted share) for the fourth
quarter and year 2004. ISG's management believes that ISG's net income
excluding this unusual tax benefit is more indicative of ISG's results of
operations.  ISG's rapid growth through acquisitions makes comparisons to
prior-year amounts not meaningful.

Our fourth quarter 2004 operating income was $258.9 million, $68 per ton
shipped, compared to $340.4 million, $84 per ton shipped, in the third quarter
2004.  Net sales declined slightly to $2,553.5 million in the fourth quarter
2004 from $2,608.3 million in the third quarter.   Shipments declined to
3,828,000 tons in the fourth quarter from 4,039,000 tons in the third quarter
principally as a result of a planned outage at our Burns Harbor steelmaking
facilities.  Our average net sales per ton shipped was $667 in the fourth
quarter 2004 compared to $646 in the third quarter.

The tables below show shipments by product and certain other data for the
periods shown.

                                             Actual
                            Fourth           Third         Year Ended
                            Quarter         Quarter         December
                        2004      2003       2004       2004        2003
  Shipments
    Hot Rolled           40%       44%        42%        41%         46%
    Cold Rolled          17        17         18         19          19
    Coated               21        21         21         21          20
    Plate                 9        10          9         10           8
    Tin Plate             7         4          6          5           3
    Other                 6         4          4          4           4
                        100%      100%       100%       100%        100%

  Net sales
   (dollars
   in millions)    $2,553.5  $1,418.3   $2,608.3   $9,015.9    $4,070.0
  Average net
   sales per
   ton shipped     $    667  $    405        646   $    580    $    391
  Shipments
   (tons
   in thousands)      3,828     3,501      4,039     15,545      10,406
  Raw steel
   production
   (tons in
   thousands)         4,621     4,142      4,726     17,758      11,274
  Net income
   (loss)
   applicable
   to common stock
   (dollars
   in millions)    $  606.0  $  (48.7)  $  256.4   $1,027.4    $  (97.1)
  Diluted income
   (loss) per
   common share    $   5.87  $  (0.57)  $   2.51   $   9.99    $  (1.26)


                                           Pro forma*
                            Fourth           Third         Year Ended
                            Quarter         Quarter         December
                        2004      2003       2004       2004        2003
  Shipments
    Hot Rolled           40%       43%        42%        41%         41%
    Cold Rolled          17        16         18         18          17
    Coated               21        21         21         21          21
    Plate                 9         8          9          9           8
    Tin Plate             7         8          6          7           9
    Other                 6         4          4          4           4
                        100%      100%       100%       100%        100%

  Net sales
   (dollars
   in millions)    $2,553.5  $1,701.9   $2,608.3   $9,472.6    $6,366.6
  Average net
   sales per
   ton shipped     $    667  $    410   $    646   $    578    $    413
  Shipments
   (tons in
   thousands)         3,828     4,150      4,039     16,398      15,433
  Raw steel
   production
   (tons
   in thousands)      4,621     4,808      4,726     18,468      16,861
  Net income
   (loss)
   applicable
   to common stock
   (dollars in
   millions)       $  606.0  $  (46.6)  $  256.4   $ 1052.5    $   (1.7)
  Diluted income
   (loss) per
   common share    $   5.87  $  (0.56)  $   2.51   $  10.22    $  (0.02)



* Pro forma information reflects the acquisitions of the Bethlehem and Weirton
assets as if they had occurred on January 1, 2003.

Costs and Expenses

Cost of sales for the fourth quarter 2004 was 86 percent of sales compared to
83 percent in the third quarter largely due to increases in alloys, natural gas
and scrap costs combined with higher maintenance spending and fixed costs being
unabsorbed during the Burns Harbor production outages.  The planned outages
included 52 days at the caster, 13 days at the blast furnace and 6 days at the
hot mill. Our LIFO provision was $52 million in the fourth quarter compared to
$24 million in the third quarter.

Profit sharing, VEBA costs and production bonuses for all employees declined to
about $40 per ton shipped in the fourth quarter 2004 from about $44 per ton
shipped in the third quarter.

Selling, general and administrative expenses were higher in the fourth quarter
2004, principally as a result of expenses relating to the merger with Mittal
Steel (see Pending Merger below).

Miscellaneous income in the fourth quarter of $17 million resulted from our
share of tariffs the United States government collected under antidumping laws
for unfairly traded imports.  The "Continued Dumping and Subsidy Offset Act"
enables affected producers to receive the proceeds from those tariffs.

Income Taxes

As of December 31, 2003, ISG had incurred a cumulative tax loss from inception
and, therefore, the estimated $1 billion of potential deferred tax asset
acquired in the Bethlehem acquisition was fully offset by a valuation
allowance.  ISG's pre-tax income of $756 million during 2004 and probability of
continued significant profitability, the strong global steel market and
available tax planning strategies made it more likely than not that ISG will
realize benefits from deferred taxes.  Therefore, the valuation allowance was
reduced, resulting in about $390 million of unusual non-cash, income tax
benefits in the fourth quarter.  Future adjustments to the valuation allowance
are possible based on periodic reviews required under generally accepted
accounting principles.

ISG's effective tax rate before the valuation allowance reduction of about 15%
for the year 2004 results in an effective rate of about 12% for fourth quarter.
 The 15% effective rate for the year 2004 takes into consideration the
temporary differences that arose during the year, the benefit of the NOL
carryforward arising in 2003 and the benefit of NOL carryforwards available for
2004 from the Bethlehem acquisition.  In addition, as required by generally
accepted accounting principles, we recognized in 2004 the benefit of temporary
differences, principally depreciation, that are expected to be available in
2005 and 2006 to carryback against the current income taxes paid for 2004.  In
2005, we expect our effective rate to be a more typical 38 percent to 39
percent.

Liquidity and Cash Flow from Operations

At December 31, 2004, we had liquidity of $848.1 million consisting of cash of
$606.7 million and available borrowing capacity of $241.4 million under our
revolving credit facility.

Cash provided by operating activities for the year 2004 was $694.7 million
compared to $288.9 million for 2003.

Capital Expenditures

We made capital expenditures of $267.2 million and acquisitions of $223.9
million during 2004.  The acquisitions include a Hot Briquetted Iron Facility
and substantially all the assets of Georgetown Steel Corporation and Weirton
Steel Corporation.  We anticipate $425 million in capital expenditures for the
year 2005.

Outlook

Underlying demand remains fairly good in most market segments.  Order entry has
increased somewhat from the seasonally slow fourth quarter. Customer
inventories, especially at service centers, are relatively high but are being
consumed.  Our first quarter 2005 shipments are expected to be about 4.0
million tons and average sales per ton shipped is expected to increase
modestly.  Costs per ton shipped should be about the same as the fourth
quarter.  This is because we do not have any major equipment outages planned
and we expect some reduction in the cost of natural gas and scrap which should
be offset by higher prices for iron ore and coal.

Pending Merger

In October 2004, Ispat International N.V., which has been renamed Mittal Steel
Company N.V., and ISG announced that they had entered into a merger agreement
under which Mittal Steel N.V. and ISG will merge.  We received early
termination of the waiting period under the Hart-Scott-Rodino Act in December
2004.  The merger of ISG and Mittal is subject to approval by their
shareholders and to other customary closing conditions and is expected to be
completed by the end of March 2005.

About International Steel Group Inc.

International Steel Group Inc. is one of the largest steel producers in North
America.  It manufactures a variety of steel products including hot- rolled,
cold-rolled and coated sheets, tin mill products, carbon and alloy plates, wire
rod and rail products and semi-finished shapes to serve the automotive,
construction, pipe and tube, appliance, container and machinery markets.  For
additional information on ISG, visit http://www.intlsteel.com/.

Forward-Looking Statements

Statements in this release that are not historical facts, including statements
accompanied by words such as "will," "believe," "expect," "estimate," or
similar terms, are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  Forward- looking statements involve
risks and uncertainties that may cause actual results or events to differ
materially from those expressed or implied in such statements.  These
statements contain time-sensitive information that reflects management's best
analysis only as of the date of this release.  ISG does not undertake any
ongoing obligation, other than that imposed by law, to publicly update or
revise any forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release. Factors that may cause
actual results and performance to differ materially from those in the
forward-looking statements include, but are not limited to, negative overall
economic conditions or conditions in the markets served; competition within the
steel industry; changes in U.S. or foreign trade policy affecting steel imports
or exports; changes in foreign currencies affecting the strength of the U.S.
dollar; actions by domestic and foreign competitors; the inability to achieve
the Company's anticipated growth objectives; changes in availability or cost of
raw materials, energy or other supplies; labor issues affecting the Company's
workforce or the steel industry generally; and the inability to implement the
Company's operating culture and philosophy at acquired facilities.  Further
information concerning issues that could materially affect financial
performance related to forward-looking statements can be found in ISG's filings
with the Securities and Exchange Commission.

Additional Information and Where to Find It

Mittal Steel filed with the Securities and Exchange Commission an amended
registration statement on Form F-4 with the SEC on February 3, 2005, which
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.  Investors and security holders of
Mittal Steel and ISG are urged to read the definitive proxy
statement/prospectus, the documents incorporated by reference therein, 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
amended registration statement. 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 [phone]. 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 [phone].

   International Steel Group Inc.
   Consolidated Statements of Operations (unaudited)
   (dollars in millions, except per share and per ton data)

                                                Third
                             Fourth Quarter    Quarter   Year Ended December
                             2004      2003      2004      2004      2003

  Net sales                $2,553.5  $1,418.3  $2,608.3  $9,015.9  $4,070.0
  Costs and expenses:
     Cost of sales          2,202.7   1,277.7   2,164.6   7,827.9   3,836.9
     Selling,general and
      administrative           78.1      56.9      66.3     260.6     153.6
     Depreciation and
      amortization             30.8      30.5      37.0     129.1      76.0
     Miscellaneous income     (17.0)       --  $     --     (17.0)       --
  Total costs and expenses  2,294.6   1,365.1   2,267.9   8,200.6   4,066.5

  Operating income            258.9      53.2     340.4     815.3       3.5
  Interest and other
   financing expense, net      11.5      20.2      13.2      59.6      50.9
  Income before taxes on
   income                     247.4      33.0     327.2     755.7     (47.4)
     Provision (benefit)
      for income taxes         31.3       2.8      70.8     118.2     (29.2)
     Valuation allowance
      adjustment             (389.9)      5.3        --    (389.9)      5.3
       Total provision
       (benefit)             (358.6)      8.1      70.8    (271.7)    (23.9)
  Net income (loss)           606.0      24.9     256.4   1,027.4     (23.5)
  Deemed dividend on
   conversion of Class B
   common stock                  --     (73.6)       --        --     (73.6)
  Net income (loss)
   applicable to common
   stock                   $  606.0  $  (48.7) $  256.4  $1,027.4   $ (97.1)
  Income (loss) per share
     Basic                 $   6.06  $  (0.57) $   2.59  $  10.41   $ (1.26)
     Diluted               $   5.87  $  (0.57) $   2.51  $   9.99   $ (1.26)

  Other information:
     Shipments (tons in
      thousands)              3,828     3,501     4,039    15,545    10,406
     Raw steel production
      (tons in thousands)     4,621     4,142     4,726    17,758    11,274
     Operating income per
      ton shipped               $68       $15       $84       $52   $    --
     Average sales per ton
      shipped                  $667      $405      $646      $580      $391


   International Steel Group Inc.
   Consolidated Balance Sheets
   (dollars in millions)

                                           December 31,      December 31,
               Assets                          2004              2003
  Current assets:                          (unaudited)
     Cash and cash equivalents             $   606.7         $   193.6
     Receivables                               830.7             555.1
     Inventories                             1,320.4             866.8
     Deferred income taxes                      75.1                --
     Assets held for sale                       39.6              68.6
     Prepaid and other current assets           58.0              24.5
        Total current assets                 2,930.5           1,708.6

  Property, plant and equipment, at cost     1,314.9             948.3
  Less: accumulated depreciation and
   amortization                               (210.0)            (86.4)
     Property, plant and equipment, net      1,104.9             861.9
  Investments in joint ventures                 27.9              27.0
  Deferred income taxes                        354.8               -
  Other assets                                  70.5              38.7
           Total assets                     $4,488.6          $2,636.2

    Liabilities and Stockholders' Equity
  Current liabilities:
     Current portion of debt and capital
      leases                                $   57.6          $   46.8
     Accounts payable                          753.3             439.5
     Accrued compensation and benefits         285.3             206.7
     Other current liabilities                 284.8             133.5
        Total current liabilities            1,381.0             826.5

  Long term liabilities:
     Debt                                      637.2             362.8
     Capital leases                            169.6             212.7
     Accrued environmental                     164.3             161.2
     Pensions and other retiree benefits       123.0             101.0
     Other obligations                           9.4              16.6
        Total liabilities                    2,484.5           1,680.8

  Stockholders' equity:
     Preferred stock                              --                --
     Common stock                                1.0               1.0
     Additional paid-in-capital              1,023.3             978.4
     Retained earnings (deficit)               998.4             (29.0)
     Accumulated other comprehensive
      income                                     1.0               5.0
     Treasury stock, at cost                   (19.6)               --
        Total stockholders' equity           2,004.1             955.4
        Total liabilities and
         stockholders' equity               $4,488.6          $2,636.2


   International Steel Group Inc.
   Consolidated Statements of Cash Flows (unaudited)
   (dollars in millions)

                                                Year Ended December
                                              2004               2003
  Cash flows from operating               (unaudited)
   activities:
    Net income (loss)                       $1,027.4          $  (23.5)
    Adjustments for items not
     affecting cash from operating
     activities
      Deferred income taxes                   (429.9)             20.5
      Depreciation and amortization            129.1              76.0
      Other                                     19.4              16.2
    Changes in working capital and
     other items:
      Receivables                             (185.8)             11.2
      Inventories                             (365.7)             67.5
      Prepaids and other current
       assets                                  (37.1)               --
      Accounts payable                         273.7              58.5
      Income taxes                             170.2             (74.0)
      Accrued compensation and
       benefits                                 62.6              67.9
      Other                                     30.8              68.6
        Net cash provided by operating
         activities                            694.7             288.9

  Cash flows from investing
   activities:
    Capital expenditures and
     investments                              (267.2)            (96.9)
    Acquisitions, net of cash received        (223.9)           (822.6)
    Proceeds from asset sales                   18.4              34.3
        Net cash used in investing
         activities                           (472.7)           (885.2)

  Cash flows from financing
   activities:
    Borrowings under revolving credit
     facility                                     --             941.6
    Payments under revolving credit
     facility                                     --          (1,002.3)
    Proceeds from debt                         594.6             710.0
    Payments on debt                          (348.3)           (469.3)
    Payments on capital leases                 (36.0)            (23.7)
    Issuance of common stock, net               12.4             648.5
    Purchase of treasury stock                 (19.6)               --
    Deferred financing fees                    (12.0)            (24.7)
        Net cash provided by financing
         activities                            191.1             780.1
        Increase in cash and cash
         equivalents                           413.1             183.8
  Cash and cash equivalents -
   beginning of period                         193.6               9.8
  Cash and cash equivalents - end of
   period                                    $ 606.7          $  193.6

  Other information:
    Interest paid                            $  38.6          $   34.3
    Interest capitalized                         1.3               0.4
    Income taxes (received) paid               (12.4)             30.0
    Capital lease obligation incurred            7.9               0.2


DATASOURCE: International Steel Group Inc.



CONTACT:  Blaise Derrico, Manager, Investor Relations of International

Steel Group Inc., [phone]



Web site:  http://www.intlsteel.com/ 

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