PROFIT SHARE 2004 VS. 2005 TOTALS BY QUARTER

(All calculations are based on 48 hour work week)

 

2004 Totals:

(All calculations are based on 48 hour work week)

1^st Quarter -- .312 x 48 hours x 13 weeks = $194.69

2^nd Quarter -- .878 x 48 hours x 13 weeks = $547.87

3^rd Quarter -- $5.328 x 48 hours x 13 weeks = $3,324.67

4^th Quarter -- $3.668 x 48 hours x 13 weeks = $2,288.83

 

2005 Totals:

(All calculations are based on 48 hour work week)

1^st Quarter -- $4.357 x 48 hours x 13 weeks = $2,718.77

2^nd Quarter -- $3.377 x 48 hours x 13 weeks = $2,107.25

3^rd Quarter -- .742 x 48 hours x 13 weeks = $463.00

4^th Quarter -- .844 x 48 hours x 13 weeks = $526.65

 

                                                2005 Total                   $5,815.76

                                                2004 Total                   $6,356.06

                                                                             $12,171.82

                   (14,314,028 tons shipped 2005)

As you can see, we received $540.30 less in 2005 compared to 2004.  Keep in mind steel prices were considerably less, (other than hi-carbon plate) in 2004.

Our total Profit Share to date is over $13,000.00 – (this includes 2003) per bargaining unit member.  The 1^st quarter projections (estimate) are looking good for 2006.

 

Why Profit Share is .844 per hour 4^th Quarter 2005

I have provided for you a simplified breakdown of the past two years Profit Share checks.  Pay close attention to the quarters of each year.  For example:  Ask the question, “Why was the first Quarter of 2004 only .312 per hour, when the 1^st Quarter of 2005 $4.357 per hour?”  The answer is, tons shipped and prices of steel were much greater in the 1^st Quarter of 2005, therefore, 2004 we hit all three EBITDA percentage brackets (5%, 7.5% and 10%).  Pay attention to the 3^rd Quarter.  Mittal USA idled five (5) blast furnaces, and cut back steel

operations based on demand.  This had an impact on tons shipped, in addition to the percentage of 5% vs. 7% or 10% measurement of profit sharing (EBITDA).

Those who have asked me prior to the contractual deadline…”What or how much is Profit Share for this Quarter” should understand that it is impossible to accurately provide that dollar figure without having the necessary data.  However, when asked, I always give my opinion (estimate) based on what data I have at the time.  I estimated at the beginning of the 4^th Quarter  that all indications pointed to higher profits – unfortunately, all cost to make a ton of steel had increased by the middle of the quarter (energy, scrap, coal, etc.) while prices of steel moderately decreased.  As you can clearly see, an estimate is never accurate – it is exactly that – an estimate. 

Remember, it is not what the company wants, or what we would like to receive.  Profit Share is exactly how much profit was earned based on price and tons shipped to reach a total EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) plus hours worked.

Our 4^th Quarter EBITDA falls into the 5% EBITDA profit per ton of all over $25 up to $49.99.  Any amount, if it was the case, over $50 would have paid at the 7.5% level.  All over $69.99 would have paid at the 10% level. 

Our 3^rd and 4^th Quarters Profit Share was paid at the 5% level only.  Our Profit Share paid accordingly at .742 and .844 per hour for 2005 3^rd and 4^th Quarters.   The 3^rd and 4^th Quarters of 2004 included all three percentages of profit per ton (5% -- 7% -- 10%) EBITDA and paid accordingly at $5.328 and $3.668 per hour.

Hopefully this will shed some light on the question that is most often asked, “How much is Profit Share going to be?  I don’t know…you tell me!

   

Paul Gipson, President

Local 6787 ~ USW