FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

October 17, 2005

 

Commission File Number: 001-32328

 

MECHEL OAO

(Translation of registrant’s name into English)

 

Krasnopresnenskaya Naberezhnaya 12

Moscow 123610

Russian Federation

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F ý   Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes o   No ý

 

Note: Regulation S-T Rule 101(b)(c) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes o   No ý

 

Note:  Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

 

Yes o   No ý

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):              

 

 



 

 

MECHEL REPORTS FIRST HALF 2005 RESULTS

 — Revenues increased 33.2% to $2.14 billion —

— Operating income of $362.40 million —

— Net income 243.62 million, $1.76 per ADR or $0.60 per diluted share —

 

Moscow, Russia – October 17, 2005 – Mechel OAO (NYSE: MTL), a leading Russian integrated mining and steel group, today announced results for the first half ended June 30, 2005.

 

US$ thousand

 

1H
2005

 

1H
2004

 

Change
Y-on-Y

 

Revenues

 

2,143,349

 

1,608,984

 

33.2

%

Net operating income

 

362,396

 

354,844

 

2.1

%

Net operating margin

 

16.9

%

22.0

%

 

Net income

 

243,624

 

254,456

 

- 4.3

%

EBITDA (1)

 

422,741

 

420,602

 

0.5

%

EBITDA margin

 

19.7

%

26.1

%

 

 


(1) See Attachment A.

 

Vladimir Iorich, Mechel’s Chief Executive Officer, commented:

 

“In the second quarter 2005 we saw negative pricing trends for both our mining and steel products. Although this was a challenging time for us, we believe that it also confirms that our dual strategy of seeking to continue to increase our mining segment through organic growth and acquisitions, while working to improve the bottom line in our steel segment through a comprehensive efficiency program, is exactly the right focus for us.  We will continue to work hard to achieve these goals, and we believe that our efforts, along with an improving price environment, will yield results.”

 

Consolidated Results

 

Net revenue in the first half of 2005 rose 33.2% to $2.14 billion from $1.61 billion in the first half of 2004. Operating income was $362.40 million, or 16.9% of net revenue, versus operating income of $354.84 million, or 22.1% of net revenue, in the first half of 2004, an increase of 2.1%.

 

For the first half of 2005, Mechel reported consolidated net income of $243.62 million, or $1.76 per ADR ($0.60 per diluted share).

 

Consolidated EBITDA rose 0.5% to $422.74 million in the first half of 2005 from $420.60 million a year ago. Please see the attached tables for a reconciliation of consolidated EBITDA to net income.

 



 

Mining Segment Results

 

US$ thousand

 

1H
2005

 

1H
2004

 

Change
Y-on-Y

 

Revenues from external customers

 

594,089

 

362,309

 

64.0

%

Operating income

 

310,851

 

185,392

 

67.7

%

Net income

 

234,125

 

162,915

 

43.7

%

EBITDA

 

319,966

 

214,079

 

49.5

%

EBITDA margin

 

53.9

%

59.1

%

 

 

Mining segment output

 

Product

 

1H 2005, thousand tonnes

 

1H 2005 vs 1H 2004, %

 

Coal

 

7,525

 

+ 3.0

 

Coking coal

 

4,134

 

- 1.5

 

Steam coal

 

3,392

 

+ 9.0

 

Iron ore concentrate

 

2,224

 

+ 17.0

 

Nickel

 

5.6

 

- 13.0

 

 

Mining segment revenue for the first half of 2005 totaled $594.09 million, or 27.7%, of consolidated net revenue, an increase of 64.0% over segment revenue of $362.31 million, or 22.5%, of consolidated net revenue, in the first half of 2004. The increase in revenues reflects solid output, strong market positions, and an increase in sales of mining products to third parties.

 

Operating income for the first half of 2005 in the mining segment rose 67.7% to $310.85 million, or 52.3%, of total segment revenues, compared to operating income of $185.39 million, or 51.2%, of total segment revenues a year ago. This increase in profitability reflects Mechel’s control over costs and the overall efficiency of our mining operations. EBITDA in the mining segment for the first half of 2005 was $319.97 million, 49.5% higher than segment EBITDA of $214.08 million in the first half of 2004. The EBITDA margin of the mining segment was 53.9%.

 

Mr. Iorich commented on the results of the mining segment: “During the second quarter we saw a declining pricing environment. However, even in those conditions, our mining segment continued to demonstrate high profitability and returns. For operational reasons, we temporarily decreased our coking coal output during the first half, but have since resumed production at full capacity. Iron ore concentrate production also demonstrated excellent results. Overall output increased, thus increasing our self-sufficiency in iron ore, and we consider it to be an important accomplishment of this period. And, of course, we were very pleased to have continued to execute our expansion strategy in mining, acquiring 1.15 billion of high-quality coal reserves at very attractive prices in the first half of the year.”

 

2



 

Steel Segment Results

 

US$ thousand

 

1H
2005

 

1H
2004

 

Change
Y-on-Y

 

Revenues from external customers

 

1,549,260

 

1,246,675

 

24.3

%

Operating income

 

51,545

 

162,802

 

-68.3

%

Net income

 

9,498

 

91,542

 

-89.6

%

EBITDA (1)

 

102,775

 

206,523

 

-50.2

%

EBITDA margin (1)

 

6.6

%

16.6

%

 

 

Steel segment output

 

Product

 

1H 2005, thousand tonnes

 

1H 2005 vs 1H 2004, %

 

Coke

 

1,360

 

- 7.0

 

Pig iron

 

1,844

 

- 1.0

 

Steel

 

3,088

 

+ 2.0

 

Rolled products

 

2,423

 

+ 2.0

 

Hardware

 

296

 

+ 13.0

 

 

Revenue from Mechel’s steel segment increased 24.2% in the first half of 2005 from $1.25 billion to $1.55 billion, or 72.3%, of consolidated net revenue, as compared to the first half of 2004.

 

In the first half of 2005, the steel segment generated operating income of $51.55 million, or 3.3%, of total segment revenues, a decrease of 68.3% over operating income of $162.80 million, or 1.3%, of total segment revenues in the first half of 2004. EBITDA in the steel segment for the first half of 2005 was $102.77 million. The EBITDA margin of the steel segment decreased from 16.6% to 6.6%. This primarily resulted from increasing raw material prices and the changing market environment for steel products.

 

Mr. Iorich commented, “In a declining pricing environment, we saw a decrease in EBITDA margin and operating income of the segment as raw material costs continued to shift profitability from our steel segment to our mining segment. This again highlights the advantages we derive from our status as the vertically integrated company. Throughout 2005, we are concentrating our efforts on efficiency improvement and controlling costs. Recently, we commissioned the second line of the new sinter plant at Chelyabinsk Metallurgical Plant, which will further improve usage ratios and cost-efficiency. However, we expect that this shift in profitability will continue to be the case through the remainder of this year. Improvement of the margin in our steel segment operations remains a particular focus of Mechel’s management.”

 

Recent Highlights

 

In 2005 Mechel has taken a number of actions to continue the successful execution of its operating strategy and enhance its position in the Russian mining and steel and markets.  Some of these actions include:

 

                  A number of transactions that have significantly expanded the capabilities of Mechel’s coal segment.  These include various successes at license auctions to develop coal

 

3



 

deposits in the Olzherasskaya Mine plot, Razvedochny plot, Sorokinsky plot, Erunakovskaya-1 Mine and Erunakovskaya-3 Mine plots. These transactions have increased Mechel’s total reserves by 1.15 billion tonnes, according to Russian reserve valuation standards, of which the vast majority is coking coal reserves of high quality.

 

                  Mechel also won an auction for the sale of ordinary shares in Yakutugol OAO that constitute 25 % + 1 share of the company’s charter capital for approximately $411.2 million. Yakutugol’s annual output is approximately 9 million tonnes, of which approximately 5.4 million tonnes is coking coal. The acquisition further expands Mechel’s mining holdings while also increasing its exposure to the Asia-Pacific region.

 

                  Continued progress on Mechel’s commitment to investing in its operations to reduce operating costs and increase efficiency.  In April, Mechel announced the start-up of the first line of a new, four-line sinter plant at its Chelyabinsk Metallurgical Plant subsidiary.  The new plant will increase Mechel’s ability to internally source its iron ore requirements from its iron ore mine, Korshunov Mining Plant.  Once fully operational, the plant, which will cost approximately $154 million, will generate approximately $70 million in annual cost savings.

 

                  To diversify the cargo flow of our coal and steel products and to improve our logistics, Mechel acquired a 90.4% stake in Kambarka Port OAO, one of Russia’s largest river ports. The facility specializes in the transshipment of bulk cargo, including ore, iron ore concentrate and coal.

 

Mr. Iorich concluded, “The second quarter of 2005 was a challenging time for us.  However, we were able to react flexibly and adjust our production plans to the changing market environment. We intend to remain focused on controlling costs and enhancing operational efficiencies across both segments, and believe that our position as an integrated producer, our diversity of products and markets, will allow us to flexibly react to the changing conditions, positioning us well for the future. On another front, our continued efforts in transparency were appreciated by the financial community, with Mechel being named third in S&P’s scoring of Russian companies’ transparency.”

 

Financial Position

 

First half cash expenditure on property, plant and equipment amounted to $310.81 million, of which $203.54 million was invested in the mining segment and $107.27 million in the steel segment.

 

In 2005, Mechel has spent $463 million on acquisitions, comprised of $411.2 million for 25%+1 share of Yakutugol Holding Company OAO, $3.5 million for 90.3% of the shares of Port Kambarka OAO, $15.7 million for 25.0% of the shares of Izhstal OAO, $32.3 million for 5.6% of the shares of Chelyabinsk Metallurgical Plant OAO, and $0.3 million for 4.5% of the shares of Korshunov Mining Plant.

 

As of June 30, 2005, total debt(1) was at $438.7 million. Cash and cash equivalents amounted to $507.5 million at the end of the first half of 2005 and net debt amounted to $(68.8) million (Net debt is defined as total debt outstanding less cash and cash equivalents).

 


(1) Total debt is comprised of short-term borrowings and long-term debt

 

4



 

The management of Mechel will host a conference call today at 10 a.m. New York time (3 p.m. London time, 6 p.m. Moscow 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 OAO

Irina Ostryakova

Director of Communications

Phone: 7-095-258-18-28

Fax: 7-095-258-18-38

irina.ostryakova@mechel.com

 

***

 

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.

 

5



 

Attachments to the 1H 2005 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

 

1H 2005

 

1H 2004

 

Net income

 

243,624

 

254,456

 

Add:

 

 

 

 

 

Depreciation, depletion and amortization

 

77,802

 

62,240

 

Interest expense

 

27,706

 

29,806

 

Income taxes

 

73,609

 

74,100

 

Consolidated EBITDA

 

422,741

 

420,602

 

 

EBITDA margin can be reconciled as a percentage to our Revenues as follows:

 

US$ thousands

 

1H 2005

 

1H 2004

 

Revenue, net

 

2,143,349

 

1,608,984

 

EBITDA

 

422,741

 

420,602

 

EBITDA margin

 

19.7

%

26.1

%

 

6



 

MECHEL OAO

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2005 AND DECEMBER 31, 2004

 

(in thousands of U.S. dollars, except share amounts)

 

June 30,
2005

 

December 31,
2004

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

507,469

 

$

1,024,761

 

Accounts receivable, net of allowance for doubtful accounts of $24,546 as of June 30, 2005, and $20,850 as of December 31, 2004, respectively

 

204, 613

 

135,597

 

Due from related parties

 

8,763

 

16,458

 

Inventories

 

482,172

 

568,545

 

Deferred cost of inventory in transit

 

59,567

 

 

Current assets of discontinued operations

 

1,644

 

1,247

 

Deferred income taxes

 

7,284

 

7,491

 

Prepayments and other current assets

 

375,362

 

349,106

 

Total current assets

 

1,646,874

 

2,103,205

 

 

 

 

 

 

 

Long-term investments in related parties

 

405,359

 

9,270

 

Other long-term investments

 

19,914

 

66,663

 

Non-current assets of discontinued operations

 

147

 

165

 

Intangible assets

 

5,916

 

6,379

 

Property, plant and equipment, net

 

1,383,353

 

1,274,722

 

Mineral licenses, net

 

230,449

 

166,483

 

Deferred income taxes

 

13,930

 

11,940

 

Goodwill

 

39,441

 

39,441

 

Total assets

 

$

 3,745,383

 

$

 3,678,268

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Short-term borrowings and current maturities of long-term debt

 

$

224,886

 

$

348,880

 

Accounts payable and accrued expenses:

 

 

 

 

 

Advances received

 

85,491

 

94,964

 

Accrued expenses and other current liabilities

 

59,505

 

69,847

 

Taxes and social charges payable

 

180,559

 

145,527

 

Trade payable to vendors of goods and services

 

221,366

 

186,233

 

Due to related parties

 

2,644

 

2,048

 

Current liabilities of discontinued operations

 

22

 

30

 

Asset retirement obligation

 

6,182

 

8,219

 

Deferred income taxes

 

24,035

 

26,521

 

Deferred revenue

 

53,626

 

760

 

Pension obligations, current portion

 

6,834

 

6,261

 

Dividends payable

 

198,989

 

 

Total current liabilities

 

1,064,139

 

889,290

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

213,844

 

216,113

 

Restructured taxes and social charges payable, net of current portion

 

65,245

 

87,364

 

Asset retirement obligations, net of current portion

 

64,780

 

66,758

 

Pension obligations, net of current portion

 

40,981

 

40,720

 

Deferred income taxes

 

101,708

 

105,330

 

Other long-term liabilities

 

94

 

240

 

Commitments and contingencies

 

 

 

Minority interests

 

140,883

 

214,824

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

Common shares (10 Russian rubles par value; 497,969,086 shares authorized, 416,270,745 shares issued and 382,969,086 shares outstanding as of June 30, 2005 and December 31, 2004)

 

133,507

 

133,507

 

Treasury shares, at cost

 

(4,187

)

(4,187

)

Additional paid-in capital

 

304,404

 

304,404

 

Accumulated other comprehensive income

 

45,657

 

93,687

 

Retained earnings

 

1,574,328

 

1,530,218

 

Total shareholders’ equity

 

2,053,709

 

2,057,629

 

Total liabilities and shareholders’ equity

 

$

 3,745,383

 

$

 3,678,268

 

 

7



 

MECHEL OAO

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED JUNE 30, 2005 AND 2004

 

 

 

Six months ended June 30,

 

(in thousands of U.S. dollars)

 

2005

 

2004

 

 

 

(unaudited)

 

(unaudited)

 

Cash Flows from Operating Activities

 

 

 

 

 

Net income

 

$

243,624

 

$

254,456

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

72,004

 

50,577

 

Depletion and amortization

 

5,798

 

11,663

 

Foreign exchange loss/(gain)

 

36,126

 

(2,858

)

Deferred income taxes

 

(4,976

)

(2,787

)

Provision for doubtful accounts

 

7,174

 

(20

)

Inventory write-down

 

2,340

 

1,559

 

Accretion expense

 

1,178

 

1,828

 

Minority interest

 

2,674

 

7,920

 

Income from equity investments

 

(8,074

)

(2,595

)

Non-cash interest expense on long-term tax and pension liabilities

 

6,408

 

7,181

 

Loss/(gain) on sale of property, plant and equipment

 

443

 

(689

)

(Gain)/loss on sale of long-term investments

 

(190

)

890

 

Loss from discontinued operations, net

 

132

 

5,578

 

Gain on forgiveness of fines and penalties

 

(12,383

)

(17,835

)

Stock-based compensation expense

 

 

1,400

 

Amortization of capitalized costs on bonds issue

 

786

 

767

 

Pension service cost and amortization of prior year service cost

 

1,162

 

 

Gain on forgiveness of accounts payable with expired legal term

 

(201

)

 

Changes in current assets and liabilities, net of effects from acquisition of new subsidiaries:

 

 

 

 

 

Accounts receivable

 

(82,974

)

(13,298

)

Inventories

 

75,610

 

(83,934

)

Trade payable to vendors of goods and services

 

31,422

 

45,673

 

Advances received

 

(7,967

)

14,837

 

Accrued taxes and other liabilities

 

41,633

 

3,083

 

Settlements with related parties

 

8,022

 

(2,132

)

Current assets and liabilities of discontinued operations

 

(570

)

(2,646

)

Deferred revenue and cost of inventory in transit, net

 

(6,701

)

(8,298

)

Other current assets

 

6,627

 

(63,320

)

Net cash provided by operating activities

 

419,127

 

206,699

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

Acquisition of subsidiaries, less cash acquired

 

(3,497

)

(53,142

)

Acquisition of minority interest in subsidiaries

 

(65,652

)

(1,082

)

Investment in Yakutugol

 

(411,182

)

 

Investments in other non-marketable securities

 

(1,934

)

(13,620

)

Proceeds from disposal of long-term investments

 

1,149

 

246

 

Proceeds from disposals of property, plant and equipment

 

1,664

 

1,353

 

Purchases of mineral licenses

 

(70,293

)

 

Purchases of property, plant and equipment

 

(240,512

)

(141,295

)

Net cash used in investing activities

 

(790,257

)

(207,540

)

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

Proceeds from short-term borrowings

 

611,724

 

634,292

 

Repayment of short-term borrowings

 

(733,711

)

(574,417

)

Dividends paid to minority interest

 

 

(285

)

Proceeds from long-term debt

 

3,062

 

2,397

 

Repayment of long-term debt and long-term portion of restructured taxes and social charges payable

 

(7,971

)

(18,144

)

Net cash (used in)/provided by financing activities

 

(126,956

)

43,843

 

Effect of exchange rate changes on cash and cash equivalents

 

(19,206

)

210

 

Net (decrease)/increase in cash and cash equivalents

 

(517,292

)

43,513

 

Cash and cash equivalents at beginning of period

 

1,024,761

 

19,303

 

Cash and cash equivalents at end of period

 

$

507,469

 

$

62,816

 

 

8



 

MECHEL OAO

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

 

 

 

Six months ended June 30,

 

(in thousands of U.S. dollars, except share and per share amounts)

 

2005

 

2004

 

 

 

(unaudited)

 

(unaudited)

 

Revenue, net (including related party amounts of $53,783 and $33,950 during six months 2005 and 2004, respectively)

 

$

2,143,349

 

$

1,608,984

 

Cost of goods sold (including related party amounts of $21,874 and $6,279 during six months 2005 and 2004, respectively)

 

(1,342,932

)

(963,380

)

Gross margin

 

800,417

 

645,604

 

 

 

 

 

 

 

Selling, distribution and operating expenses:

 

 

 

 

 

Selling and distribution expenses

 

(243,680

)

(172,838

)

Taxes other than income tax

 

(52,380

)

(25,372

)

Accretion expense

 

(1,178

)

(1,828

)

Provision for doubtful accounts

 

(7,174

)

20

 

General, administrative and other operating expenses

 

(133,609

)

(90,742

)

Total selling, distribution and operating expenses

 

(438,021

)

(290,760

)

Operating income

 

362,396

 

354,844

 

 

 

 

 

 

 

Other income and (expense):

 

 

 

 

 

Income from equity investments

 

8,074

 

2,595

 

Interest income

 

6,975

 

1,125

 

Interest expense

 

(27,706

)

(29,806

)

Other income, net

 

6,426

 

10,439

 

Foreign exchange (loss)/gain

 

(36,126

)

2,858

 

Total other income and (expense), net

 

(42,357

)

(12,789

)

Income before income tax, minority interest and discontinued operations

 

320,039

 

342,055

 

 

 

 

 

 

 

Income tax expense

 

(73,609

)

(74,100

)

Minority interest in income of subsidiaries

 

(2,674

)

(7,920

)

Income from continuing operations

 

243,756

 

260,035

 

Loss from discontinued operations, net of tax

 

(132

)

(5,579

)

Net income

 

$

243,624

 

$

254,456

 

Currency translation adjustment

 

(48,030

)

7,149

 

Unrealized losses on available-for-sale securities

 

 

(783

)

Comprehensive income

 

$

195,594

 

$

260,822

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

 

Earnings per share from continuing operations

 

$

0.60

 

$

0.71

 

(Loss) per share effect of discontinued operations

 

 

(0.02

)

Net income per share

 

$

0.60

 

$

0.69

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.49

 

$

0.01

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

403,118,680

 

367,150,968

 

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

MECHEL OAO

 

 

 

 

 

By:

Vladimir Iorich

 

 

Name:

Vladimir Iorich

 

Title:

CEO

 

 

 

 

Date:  October 17, 2005