Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:

“The operating environment in the first half continued to be challenging but we have delivered progress in a number of important areas. The benefits of our restructuring efforts - particularly in Europe - are evident; strong cash-flow performance has enabled us to reduce net debt to below our mid-year target; and the expansion of ArcelorMittal Mines Canada is largely complete and will ramp up during the second half.

Although we have revised our full year guidance, the second half should deliver a clear underlying improvement relative to the second half of 2012, which we believe marked the lowest point in the cycle.”

 
Second quarter 2013 earnings analyst conference call

ArcelorMittal management will host a conference call for members of the investment community to discuss the second quarter 2013 and half year 2013 financial performance at:

Forward-Looking Statements

This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target” or similar expressions. Although ArcelorMittal’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets ( Commission de Surveillance du Secteur Financier ) and the United States Securities and Exchange Commission (the “SEC”) made or to be made by ArcelorMittal, including ArcelorMittal’s Annual Report on Form 20-F for the year ended December 31, 2012 filed with the SEC. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise.

ArcelorMittal second quarter 2013 and half year 2013 results

ArcelorMittal, the world’s leading steel company, today announces results for the three month and six month periods ended June 30, 2013.

Corporate responsibility and safety performance

Health and safety - Own personnel and contractors lost time injury frequency rate[3]

Health and safety performance, based on own personnel figures and contractors lost time injury frequency (“LTIF”) rate, remained flat at 0.9x in the second quarter of 2013 (“2Q 2013”) as compared to the first quarter of 2013 (“1Q 2013”) and 0.8x for the second  quarter of 2012 (“2Q 2012”). During 2Q 2013, improvements in the Mining and Long Carbon segments were offset by deterioration in all other segments.

Health and safety performance improved to 0.9x in the first six months of 2013 (“1H 2013”) as compared to 1.0x for the first six months of 2012 (“1H 2012”), with improvements across the majority of segments.

Despite this encouraging performance in LTIF rate, there is still more work to be done. The Company’s efforts to improve the group’s Health and Safety record will continue. Whilst the LTIF target of 1.0x is maintained for 2013, the Company is focused on further reducing the rate of severe injuries and fatality prevention.

Analysis of results for the six months ended June 30, 2013 versus results for the six months ended June 30, 2012

ArcelorMittal’s net loss for 1H 2013 was $1.1 billion, or $(0.65) loss per share, as compared to net income for 1H 2012 of $1.1 billion, or $0.72 per share.

Total steel shipments for 1H 2013 were lower at 42.3 million metric tonnes as compared with 43.9 million metric tonnes at 1H 2012.

Sales for 1H 2013 decreased by 11.6% to $39.9 billion as compared with $45.2 billion for 1H 2012 primarily due to lower average steel selling prices (-6.0%) and lower steel shipments (-3.7%).

Depreciation of $2.3 billion for 1H 2013 was comparable with 1H 2012.

Impairment charges for 1H 2013 were $39 million primarily relating to the closure of the organic coating and tin plate lines in Florange (Flat Carbon Europe). Impairment charges for 1H 2012 totalled $69 million, primarily related to the extended idling of the electric arc furnace and continuous caster at the Schifflange site in Luxembourg (Long Carbon Europe).

Restructuring charges for 1H 2013 were $173 million, including $137 million of cost incurred for the long term idling of the Florange liquid phase (including voluntary separation scheme costs, site rehabilitation/safeguarding costs, and take or pay obligations). Restructuring charges for 1H 2012 totalled $297 million and consisted largely of costs associated with the implementation of Asset Optimization primarily impacting Flat Carbon Europe and Long Carbon Europe operations.

Operating income for 1H 2013 was $756 million as compared with operating income of $2.0 billion for 1H 2012. Operating results for 1H 2013 were positively impacted by a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada. In addition, the operating income for 1H 2013 was positively impacted by $92 million related to “Dynamic Delta Hedge” (DDH) income. The DDH income recorded in 1Q 2013 was the final instalment of such income. This gain on the unwinding of a currency hedge related to raw materials purchases was initially recorded in equity in 4Q 2008, and has now been fully recorded in the income statement. Operating income for 1H 2012 was positively impacted by $295 million of DDH income recognized during the period.  Operating income during 1H 2012 was also positively impacted by $624 million: changes to the employee benefit plans at Dofasco led to curtailment gains of $285 million[9] and the Skyline Steel divestment[11] led to a gain of $339 million.

Loss from equity method investments and other income in 1H 2013 was $42 million, as compared to income of $103 million in 1H 2012. Losses incurred during 1H 2013 related primarily to a contingent consideration related to the Gonvarri Brasil acquisition in 2008 and weaker performance of European associates during the year.

Net interest expense (including interest expense and interest income) was $949 million for 1H 2013 as compared to $917 million for 1H 2012. Net interest expense increased due to the interest rate “step up” clauses in most of the Company’s outstanding bonds, which were triggered by the Company’s rating downgrades that occurred in the second half of 2012 and which resulted in incremental interest expense of $40 million in 1H 2013.

Foreign exchange and other net financing costs[10] were $685 million for 1H 2013 as compared to costs of $484 million for 1H 2012.

ArcelorMittal recorded an income tax expense of $196 million for 1H 2013, as compared to an income tax benefit of $394 million for 1H 2012.

Gains attributable to non-controlling interests for 1H 2013 were $9 million as compared with losses attributable to non-controlling interests for 1H 2012 of $1 million.

Analysis of results for 2Q 2013 versus 1Q 2013 and 2Q 2012

ArcelorMittal recorded a net loss for 2Q 2013 of $0.8 billion, or $(0.44) loss per share, as compared to a net loss of $0.3 billion, or $(0.21) loss per share for 1Q 2013, and net income of $1.0 billion, or $0.66 earnings per share, for 2Q 2012.

Total steel shipments for 2Q 2013 were 21.3 million metric tonnes as compared with 20.9 million metric tonnes for 1Q 2013 and 21.7 million metric tonnes for 2Q 2012.

Sales for 2Q 2013 increased by 2.3% to $20.2 billion as compared with $19.8 billion for 1Q 2013, and were 10.1% lower than $22.5 billion for 2Q 2012. Sales were higher in 2Q 2013 as compared to 1Q 2013 primarily due to higher steel shipment volumes (+1.7%).

Depreciation amounted to $1.1 billion for 2Q 2013, as compared to $1.2 billion for both 1Q 2013 and 2Q 2012.

Impairment charges for 2Q 2013 were $39 million primarily relating to the closure of the organic coating and tin plate lines in Florange (FCE). There were no impairment charges recorded in 1Q 2013 or 2Q 2012.

Restructuring charges for 2Q 2013 were $173 million, including $137 million of costs incurred for the long term idling of the Florange liquid phase (including voluntary separation scheme costs, site rehabilitation/safeguarding costs, and take or pay obligations). Restructuring charges for 1Q 2013 were nil. Restructuring charges for 2Q 2012 totalled $190 million and consisted primarily of costs associated with the project to close two blast furnaces, sinter plant, steel shop and continuous casters in Liege, Belgium.

Operating income for 2Q 2013 was $352 million as compared with operating income of $404 million for 1Q 2013 and operating income of $1.2 billion for 2Q 2012. Operating income for 1Q 2013 was positively impacted by a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada. Operating income during 2Q 2012 was positively impacted by $339 million gain from the Skyline Steel divestment[11]. In addition, operating income for 1Q 2013 and 2Q 2012 was positively impacted by $92 million and $136 million, respectively, of DDH income recognized.

Loss from equity method investments and other income in 2Q 2013 was $24 million as compared to loss of $18 million in 1Q 2013 and an income of $118 million in 2Q 2012. Losses incurred during 2Q 2013 relate primarily to a contingent consideration from the Gonvarri Brasil acquisition in 2008.

Net interest expense (including interest expense and interest income) in 2Q 2013 was $471 million, as compared to $478 million for 1Q 2013 and $456 million for 2Q 2012.

Foreign exchange and other net financing costs were $530 million for 2Q 2013 as compared to costs of $155 million for 1Q 2013 and costs of $77 million for 2Q 2012. This includes a foreign exchange loss of $249 million in 2Q 2013 as compared to a gain of $96 million in 1Q 2013 primarily driven by 9% devaluation of Brazilian Real versus USD which impacted loans and payables denominated in foreign currency.

ArcelorMittal recorded an income tax expense of $99 million for 2Q 2013, as compared to an income tax expense of $97 million for 1Q 2013 and an income tax benefit of $218 million for 2Q 2012.

Gains attributable to non-controlling interests for 2Q 2013 were $8 million as compared with gains of $1 million for 1Q 2013 and losses of $6 million for 2Q 2012. 

Capital expenditure projects

The following tables summarize the Company’s principal growth and optimization projects involving significant capital expenditures.

a)     Ongoing projects refer to projects for which construction has begun (excluding various projects that are under development), or have been placed on hold pending improved operating conditions.
b)     The Company’s Board of Directors has approved the Phase 2 expansion of the Liberia project that would lead to annual premium sinter feed concentrate production capacity of 15 million tonnes per annum. The first sinter feed concentrate production is expected in 2015, replacing the Phase 1 – 4 million tonnes per annum direct-shipped operation. Product specification has changed to a sinter feed which has resulted in an engineering scope change.
c)     The Company’s Board of Directors has approved the Early Revenue Phase (“ERP”) at Baffinland, which requires less capital investment than the full project as originally proposed.  Implementation of the ERP is now underway with a goal to reach a 3.5MT per annum production rate by 2015. The budget for the ERP is approximately $700 million and will require the upgrading of the road that connects the existing port in Milne Inlet to the mine site as well as modifications to existing permits that are expected to be granted in 2013 and in the first half of 2014. 
d)     During 2Q 2013 the Company has decided to resume the wire rod mill part of Monlevade expansion and rebar and meltshop expansion plan in Juiz de Fora (Brazil) with total capex estimate of $180 million. This part of the overall investment is expected to be finished in 2015. The upstream portion of the investment remains on hold.  
e)     Final capex for the AMMC expansion project is $1.6 billion. Optimization and ramp-up of project in 2H 2013.

Analysis of segment operations

Flat Carbon Americas crude steel production declined by 9.8% to 5.6 million tonnes in 2Q 2013 as compared to 6.2 million tonnes in 1Q 2013, driven primarily by a significant drop in Flat USA following labor issues at Burns Harbor and operational incidents at Indiana Harbor East and West, for which reductions in inventory and supplies from other Flat Carbon America units partially mitigated the market impact.

Steel shipments in 2Q 2013 were 5.4 million tonnes, 2.7% lower than in 1Q 2013, primarily driven by lower shipment volumes in Flat USA driven by incidents noted above, offset in part by improvements in Canada and South America.

Sales in the Flat Carbon Americas segment were $4.8 billion in 2Q 2013, a decrease of 1.5% as compared to $4.9 billion in 1Q 2013. The decrease in sales was due primarily to lower shipments in Flat USA, offset in part by higher steel selling prices in South America.

EBITDA in 2Q 2013 decreased 33.9% to $293 million as compared to $443 million in 1Q 2013. EBITDA in 1Q 2013 was positively impacted by a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada. Excluding this one-time gain, EBITDA in 2Q 2013 decreased 26.0% to $293 million as compared to $396 million in 1Q 2013, impacted by the loss of volumes in Flat USA partially offset by improvements in South America.

Flat Carbon Europe crude steel production increased by 2.8% to 7.5 million tonnes in 2Q 2013 as compared to 7.3 million tonnes in 1Q 2013.  

Steel shipments in 2Q 2013 were 7.1 million tonnes, an increase of 2.5% as compared to 6.9 million tonnes in 1Q 2013 due to seasonal factors.

Sales in the Flat Carbon Europe segment increased to $6.9 billion in 2Q 2013 as compared to $6.8 billion in 1Q 2013. Sales benefitted primarily from higher steel shipment volumes as average steel selling prices were essentially stable in USD.

EBITDA in 1Q 2013 included $92 million of DDH income recognized during the quarter. Excluding this gain, EBITDA in 2Q 2013 increased 63.9% to $341 million as compared to $208 million in 1Q 2013. Steel margins were positively impacted in 2Q 2013 by higher volumes and a positive price-cost effect reflecting higher management gains and benefits from asset optimization.

Operating results for 2Q 2013 were negatively impacted by restructuring costs of $157 million, primarily associated with the long term idling of the liquid phase at the Florange site in France and impairment charges of $24 million primarily relating to the closure of the organic coating and tin plate lines in Florange.

Long Carbon Americas and Europe crude steel production amounted to 5.7 million tonnes in 2Q 2013, essentially flat as compared to 1Q 2013.

Steel shipments in 2Q 2013 were 5.8 million tonnes, an increase of 7.0% as compared to 5.4 million tonnes in 1Q 2013, primarily due to higher volumes in Europe (seasonal impact), South America, Mexico and Tubular products.

Sales in the Long Carbon Americas and Europe segment increased to $5.4 billion in 2Q 2013 as compared to $5.1 billion in 1Q 2013. Sales were higher due to improved volumes, partially offset by lower average steel selling prices where higher average steel selling prices in the Tubular and Americas businesses were outweighed by reduced prices in the European business.

EBITDA in 2Q 2013 was $556 million, an improvement of 32.7% as compared to $419 million in 1Q 2013, primarily driven by higher volumes and improved profitability in South America and Tubular products. 

AACIS segment crude steel production was 3.7 million tonnes in 2Q 2013, an increase of 13.4% as compared to 1Q 2013. Production increased during 2Q 2013 primarily as a result of the recovery in South Africa following the fire at Vanderbijlpark (“VDP”) that negatively impacted production in 1Q 2013.

Steel shipments in 2Q 2013 amounted to 3.1 million tonnes, a decrease of 1.4% compared to 1Q 2013 with lower volumes in Ukraine and South Africa.

Sales in the AACIS segment were flat at $2.1 billion in 2Q 2013 as compared to 1Q 2013 as the CIS market in particular remained weak.

EBITDA in 2Q 2013 was $120 million as compared to $19 million in 1Q 2013, when EBITDA was negatively impacted by $67 million due to the fire disruption at VDP.

Shipments in the Distribution Solutions segment in 2Q 2013 were 4.0 million tonnes, a decrease of 1.4% as compared to 4.1 million tonnes in 1Q 2013, primarily due to the reduction of export business in our CIS operations.

Sales in the Distribution Solutions segment in 2Q 2013 were $3.6 billion, an increase of 1.2% as compared to 1Q 2013, due primarily to higher average steel selling prices (+2.5%) offset in part by lower steel shipment volumes.

EBITDA in 2Q 2013 was $29 million as compared to $15 million in 1Q 2013, with the improvement primarily due to a better geographical sales mix following a seasonal improvement in Europe. EBITDA for 2Q 2012 of $385 million includes a gain of $339 million from the Skyline divestment[11].

(a)  Own iron ore and coal production not including strategic long-term contracts
(b)  Iron ore and coal shipments of market-priced based materials include the Company’s own mines, and share of production at other mines, and exclude supplies under strategic long-term contracts

Own iron ore production (not including supplies under strategic long-term contracts) in 2Q 2013 was 15.0 million metric tonnes, 14.5% higher than 1Q 2013, primarily due to higher production at our Canadian operations and Liberia.

Shipments at market price increased 12.3% in 2Q 2013 as compared to 1Q 2013 primarily due to higher shipments in Canada which was impacted by production and freezing lake constraints during first quarter. Shipments at market price in 2Q 2013 remained flat at 8.2 million metric tonnes as compared to 2Q 2012.

Own coal production (not including supplies under strategic long-term contracts) in 2Q 2013 was 2.0 million metric tonnes, representing a decrease of 2.9% as compared to 1Q 2013.

EBITDA attributable to the Mining segment for 2Q 2013 was $432 million, essentially flat as compared to 1Q 2013. EBITDA during the quarter was positively impacted by higher volumes from our Canadian operations and the effect of lagged pricing on a portion of our shipments from Canada and Mexico, offset by reduced seaborne iron ore prices. EBITDA attributable to the Mining segment was $548 million in 2Q 2012.

Liquidity and Capital Resources

For 2Q 2013, net cash provided by operating activities was $2.4 billion, compared to net cash used in operating activities of $302 million in 1Q 2013. Cash provided by operating activities in 2Q 2013 included a $1.3 billion release of operating working capital as compared to an investment in operating working capital of $0.5 billion in 1Q 2013. Rotation days[13] in 2Q 2013 significantly improved to 55 days as compared to 64 days in 1Q 2013. Working capital and rotation days are at the lower end of the range for the first half of 2013, and the expectation is that they will increase in 3Q 2013 in line with normal seasonal trends. Net cash provided by other operating activities in 2Q 2013 of $0.6 billion primarily relates to VAT refunds and reversal of unrealized foreign exchange losses.

Net cash used in investing activities during 2Q 2013 was $717 million, as compared to $803 million in 1Q 2013. Capital expenditures decreased to $709 million in 2Q 2013 as compared to $927 million in 1Q 2013. The Company continues to focus primarily on core growth capital expenditures in its mining business given attractive return profiles. While most planned steel investments remain suspended, during the quarter the Company restarted its Monlevade expansion project in Brazil. The project is expected to be completed in two phases with the first phase (investment in which has now been approved) focused mainly on downstream facilities and consists of a new wire rod mill in Monlevade with additional capacity of 1,050 ktpy of coils with capex estimate of $140 million; Juiz de Fora rebar capacity increase from 50 to 400 ktpy and meltshop capacity increase by 200 ktpy with capex estimate of $40 million. A decision whether to invest in Phase 2 of the project, focusing on the upstream facilities in Monlevade (sinter plant, blast furnace and meltshop), will be taken in the future. Other investing activities in 1Q 2013 of $124 million inflow included $139 million proceeds from the reduction in the Company’s stake in the Baffinland joint venture.

Net cash used in financing activities for 2Q 2013 was $2.8 billion as compared to cash provided by financing activities of $4.7 billion in 1Q 2013. Net cash used in financing activities for 2Q 2013 included debt repayment of $3.3 billion (primarily €1.5 billion for the 8.25% bond due 2013 and $1.2 billion for the 5.375% bond due 2013) and $290 million cash received related to the second and final instalment of the previously announced investment by a consortium led by POSCO and China Steel Corporation (CSC) to acquire a joint venture interest in ArcelorMittal’s Labrador Trough iron ore mining and infrastructure assets in Quebec, Canada. Net cash provided by financing activities for 1Q 2013 was primarily the result of cash proceeds from the combined offering[14] of ordinary shares and mandatorily convertible subordinated notes totalling approximately $4.0 billion, as well as $810 million in cash received related to the first instalment of the AMMC stake sale discussed above.

During 2Q 2013, the Company paid dividends to minority shareholders of $3 million as compared to $34 million in 1Q 2013 (which included $28 million for the subordinated perpetual capital securities issued in September 28, 2012). During 2Q 2012, the Company paid dividends amounting to $294 million.

At June 30, 2013, the Company’s cash and cash equivalents (including restricted cash and short-term investments) amounted to $6.9 billion as compared to $8.0 billion at March 31, 2013. Gross debt declined from $26 billion at March 31, 2013 to $23.1 billion at June 30, 2013. As of June 30, 2013, net debt was $16.2 billion, as compared with $18 billion at March 31, 2013, driven by improved cash flow from operations ($2.4 billion) and M&A proceeds described above.

The Company had liquidity[15] of $16.9 billion at June 30, 2013, a decrease of $1.1 billion as compared with liquidity of $18 billion at March 31, 2013, consisting of cash and cash equivalents (including restricted cash and short-term investments) of $6.9 billion and $10 billion of available credit lines. At June 30, 2013, the average debt maturity was 6.4 years.

3-year $3 billion management gains program

During the investor day held on March 15, 2013, the Company announced a new management gains improvement target of $3 billion by the end of 2015. The program is expected to yield approximately $1 billion of savings over each of the next 3 years. Action plans and detailed targets have been set at the various business units and progress will be monitored and reported upon in future quarters. The Group is targeting cost savings related to reliability, fuel rate, yield and productivity with two thirds of costs targeted being variable costs.

At June 30, 2013, $0.6 billion of annualized improvements had been achieved on a run rate basis.

Asset Optimization

The essential components of Asset Optimization have been announced. The Company confirms that the Asset Optimization introduced in 4Q 2011 is expected to deliver annualized savings of $1 billion, the full impact of which should be seen in 2014.

Outlook and guidance

In line with our guidance framework, underlying profitability is still expected to improve in 2013, driven by three factors:

a) a 1-2% increase in steel shipments;
b) an approximate 20% increase in marketable iron ore shipments; and
c) the realized benefits from Asset Optimization and Management Gains initiatives

Nevertheless, we adjust 2013 EBITDA guidance from "greater than $7.1 billion" to "greater than $6.5 billion" due to the following factors:

a) lower than forecast apparent demand (primarily North America and Europe) and its impact on group shipments;
b) lower than anticipated coking coal prices, including the impact on vertically integrated operations;
c) lower premiums for high quality iron ore concentrate; and
d) additional repairs and maintenance spend following production incidents during the first half.

Due to an expected investment in working capital and the payment of the annual dividend, net debt is expected to increase in 2H 2013 to approximately $17 billion; the $15 billion medium term net debt target is unchanged.

2013 capital expenditures are now expected to be approximately $3.7 billion.

a) The volume variance indicates the sales value gain/loss through selling a higher/lower volume compared to the reference period, valued at reference period contribution (selling price–variable cost). The mix variance indicates sales value gain/loss through selling different proportions of mix (product, choice, customer, market including domestic/export), compared to the reference period contribution. 
b) The price-cost variance is a combination of the selling price and cost variance. The selling price variance indicates the sales value gain/loss through selling at a higher/lower price compared to the reference period after adjustment for mix, valued with the current period volumes sold. The cost variance indicates increase/decrease in cost (after adjustment for mix, one-time items, non-steel cost and others) compared to the reference period cost. Cost variance includes the gain/loss through consumptions of input materials at a higher price/lower price, movement in fixed cost, changes in valuation of inventory due to movement in capacity utilization etc.  
c) Non-steel EBITDA variance primarily represents the gain/loss through the sale of by-products and services.
d) Other represents the gain/loss through movements in provisions including write downs, write backs of inventory, onerous contracts, reversal of provisions, dynamic delta hedge on raw materials, foreign exchange, etc. as compared to the reference period. Specifically includes delta of $92 million for DDH income and $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada.

Appendix 9: End notes

[1]The financial information in this press release has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). While the interim financial information included in this announcement has been prepared in accordance with IFRS applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting”. The numbers in this press release have not been audited. The financial information and certain other information presented in a number of tables in this press release have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this press release reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.
[2]On January 1, 2013, in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”), ArcelorMittal mandatorily adopted IFRS 10 (“Consolidated Financial Statements”), IFRS 11 (“Joint Arrangements”), IFRS 12 (“Disclosure of Interests in Other Entities”), IFRS 13 (“Fair Value Measurement”), the revision of IAS 19 (“Employee Benefits”) and IFRIC 20 (“Stripping Costs in the Production Phase of a Surface Mine”). Prior period 2012 information has been adjusted retrospectively for the mandatory adoption of these new standards and interpretations except for IFRS 13 which is applied only prospectively. The main effects for ArcelorMittal are related to the revision of IAS 19R which was applied retrospectively. Following the changes, the previously unrecognized actuarial gains and losses on pension liabilities are recorded in the statements of financial position in full against equity. It means that the previously unrecognized actuarial gains and losses are no longer recorded over time against profit and loss following the then allowed “corridor approach”. All future actuarial gains and losses will also be immediately recognized in other comprehensive income (OCI). In addition, for purposes of measuring the net financial cost on pension liabilities/assets, the expected rate of return on assets must be equal to the discount rate applicable to liabilities.
[3]Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
[4]EBITDA is defined as operating income plus depreciation, impairment expenses and exceptional items. 
[5]EBITDA in 1Q 2013 of $1,565 million was positively impacted by a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada and $92 million, related to “Dynamic Delta Hedge” (DDH) income. The DDH income recorded in 1Q 2013 was the final instalment of such income. The gain on the unwinding of a currency hedge related to raw materials purchases was initially recorded in equity in 4Q 2008, and has now been fully recorded in the income statement. 
[6]Market priced tonnes represent amounts of iron ore and coal from ArcelorMittal mines that could be sold to third parties on the open market.  Market priced tonnes that are not sold to third parties are transferred from the Mining segment to the Company’s steel producing segments and reported at the prevailing market price.  Shipments of raw materials that do not constitute market priced tonnes are transferred internally and reported on a cost-plus basis.
[7]Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments.
[8]EBITDA/t includes total group EBITDA divided by total steel shipments.
[9]ArcelorMittal Dofasco has made a number of changes to its pension plan and health and dental benefits. Employees at Dofasco will be transitioned from an existing defined benefit pension plan to a new defined contribution pension plan. Changes to health and dental benefits will result in an increase in the portion of the cost of health benefits that is borne by participants in the plans. These changes resulted in a curtailment gain of $241 million in 1Q 2012. Under IAS 19R, the curtailment gain in Dofasco increased by $44 million to $285 million due to the full underlying liability being recognized on the balance sheet.
[10]Foreign exchange and other net financing costs include foreign currency swaps, bank fees, interest on pensions, impairments of financial instruments and revaluation of derivative instruments.
[11]On June 20, 2012, ArcelorMittal completed the sale of its steel foundation distribution business in NAFTA, Skyline Steel and Astralloy (“Skyline Steel”), to Nucor Corporation for net cash consideration of $674 million. The transaction comprises 100% of ArcelorMittal’s stake in Skyline Steel’s operations in the NAFTA countries and the Caribbean.
[12]There are three categories of sales: 1) “External sales”: mined product sold to third parties at market price; 2) “Market-priced tonnes”: internal sales of mined product to ArcelorMittal facilities and reported at prevailing market prices; 3) “Cost-plus tonnes” - internal sales of mined product to ArcelorMittal facilities on a cost-plus basis. The determinant of whether internal sales are reported at market price or cost-plus is whether the raw material could practically be sold to third parties (i.e. there is a potential market for the product and logistics exist to access that market).
[13]Rotation days are defined as days of accounts receivable plus days of inventory minus days of accounts payable. Days of accounts payable and inventory are a function of cost of goods sold of the quarter on an annualized basis. Days of accounts receivable are a function of sales of the quarter on an annualized basis.
[14]On January 14 and 16, 2013, ArcelorMittal closed its offerings (the “Combined Offering”) of ordinary shares and mandatorily convertible subordinated notes (“MCNs”), respectively. The total aggregate proceeds from the Combined Offering were approximately $4.0 billion (before deduction of commissions and expenses). The ordinary shares offering represented an aggregate amount of $1.75 billion, representing approximately 104 million ordinary shares at an offering price of $16.75 (EUR 12.83 at a EUR/USD conversion rate of 1.3060) per ordinary share.  The MCN offering represented an aggregate amount of $2.25 billion. The MCNs mature in January 2016, were issued at 100% of the principal amount and will be mandatorily converted into ordinary shares of ArcelorMittal at maturity, unless earlier converted at the option of the holders or ArcelorMittal or upon certain specified events in accordance with the terms of the MCNs. The MCNs bear interest of 6.00% per annum, payable quarterly in arrears. The initial minimum conversion price of the MCNs is $16.75, corresponding to the placement price of shares in the concurrent ordinary shares offering as described above, and the initial maximum conversion price was set at approximately 125% of the minimum conversion price (corresponding to $20.94) the minimum and maximum conversion prices and ratios are subject to adjustment upon the occurrence of certain events. The Mittal family participated in the Combined Offering by acquiring $300 million of MCNs and $300 million of ordinary shares. 
[15]Includes back-up lines for the commercial paper program.
[16]Total of all finished production of fines, concentrate, pellets, lumps and coal (includes share of production and strategic long-term contracts).
[17]ArcelorMittal Distribution Solutions shipments are eliminated in consolidation as they primarily represent shipments originating from other ArcelorMittal operating subsidiaries.
[18]Operating working capital is defined as trade accounts receivable plus inventories less trade accounts payable.
[19]Capex includes the acquisition of intangible assets (such as concessions for mining and IT support) and includes payments to fixed asset suppliers.
[20]Average steel selling prices are calculated as steel sales divided by steel shipments.
[21] Shipments originating from a geographical location.
[22]Includes Tubular products business.
[23]Commercial paper is expected to continue to be rolled over in the normal course of business.
[24]Gearing is defined as (A) long-term debt, plus short-term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale), divided by (B) total equity.