Dofasco reports $18.7 million first quarter loss

Consolidated results within expectations despite large QCM loss;

Dofasco and Gallatin shipments remain strong.



Apr 26, 2001, 01:00 ET from Dofasco Inc.

    HAMILTON, ON, April 26 /PRNewswire/ - Dofasco Inc. released its results
 for the first quarter of 2001 today, announcing a loss consistent with its
 outlook from the previous quarter and within the company's range of
 expectations given the condition of North American steel markets resulting
 from the current market correction.
     Commenting on the quarter, Dofasco's President and Chief Executive
 Officer John Mayberry said, "This was a quarter in which Dofasco and Dofasco
 people differentiated themselves in their ability to respond to the conditions
 that have impacted the entire North American steel industry. Dofasco continued
 to generate excellent cash flow, in excess of $100 million during the quarter,
 and actually increased consolidated shipments by 44,000 tons compared to the
 first quarter a year ago in a North American steel industry that is generally
 operating at less than 80% of capacity. At the same time, Dofasco's employees
 responded promptly and effectively with significant cost reduction initiatives
 at our Hamilton operations, the effect of which will be more fully reflected
 in our results later in the year."
     For the three months ended March 31, 2001, Dofasco's consolidated loss
 was $18.7 million. After deducting preferred share dividends, the loss
 attributable to common shares was $0.25 per share. In the first quarter of
 2000, consolidated net income was $66.2 million and earnings per share were
 $0.85. Consolidated sales in the quarter declined to $745.7 million from
 $806.5 million in the first quarter of 2000, despite an increase in shipments
 from 1,084,000 tons to 1,128,000 tons.
     Quebec Cartier Mining Company (QCM), Dofasco's joint venture iron ore
 mining operation in Quebec, was the most significant contributor to the loss,
 accounting for more than 75% of Dofasco's consolidated pre-tax loss in the
 first quarter. QCM implemented a number of shutdowns in response to reduced
 European demand and subsequently suspended all operations after being unable
 to reach a new labour agreement with its employees.
     Dofasco's 50% share of QCM's loss before taxes in the quarter was $18.2
 million, a significant increase from a loss before taxes of $4.7 million in
 the first quarter of 2000. As a result of production disruptions during the
 quarter, QCM's shipments declined to 1.34 million tonnes from 2.84 million
 tonnes in the first quarter of 2000. Totals sales revenue declined by more
 than 50% from the same period last year.
     On April 24th, QCM reached an agreement in principle with its union to
 resolve their labour dispute. The union's negotiating committee is expected to
 unanimously recommend acceptance of the tentative agreement and a ratification
 vote will be held April 27th.
     Dofasco's Steel Operations segment, which includes the Hamilton
 operations, reported a pre-tax loss of $2.9 million in the quarter, compared
 to income before taxes of $93.9 million for the first quarter of 2000.
 Shipments from Hamilton were 960,000 tons, up from 930,000 tons in the same
 period last year. The average revenue per ton shipped in the quarter was more
 than $60 per ton below last year's first quarter, as selling prices in the
 market declined to compete with unfairly traded imports.
     Mr. Mayberry continued, "While the loss of $60 per ton fell directly to
 our bottom line, the reverse will also be true. Even small improvements in
 pricing have the potential to significantly improve our profitability, given
 our low cost structure."
     Dofasco's 50% share of Gallatin Steel's pre-tax loss for the first
 quarter of 2001 was $7.4 million, compared to income before taxes of $8.5
 million in the first quarter of 2000. Gallatin had a strong operating
 performance in the quarter, shipping 336,000 tons compared to 308,000 tons in
 the first quarter a year earlier. As a result of operating at capacity
 throughout the quarter, Gallatin's cost performance was excellent. Gallatin's
 loss is primarily attributable to lower hot rolled steel selling prices. Their
 average revenue was more than $100 per ton below the level of the first
 quarter of 2000.
     Recent findings by Canadian and U.S. trade monitoring agencies should
 help address the impact of unfairly traded imports on pricing levels in North
 American steel markets. Earlier this month, the Canada Customs and Revenue
 Agency announced preliminary dumping duties to apply to shipments of imports
 of hot rolled steel into Canada from 12 countries and the U.S. Department of
 Commerce announced preliminary dumping duties on shipments of hot rolled steel
 from 11 countries.
     Looking forward, Mr. Mayberry said, "We believe this short-term pain will
 become Dofasco's long-term gain as the market improves. We have continued to
 grow our business throughout the market correction by sustaining our
 commitment to meeting the needs of our customers and by virtue of our strong
 balance sheet and operational flexibility. Dofasco is well poised to benefit
 disproportionately as market conditions improve, and we continue to invest for
 future growth."
     Dofasco is a leading North American steel solutions provider. Product
 lines include hot rolled, cold rolled, galvanized, Extragal(TM), Galvalume(TM)
 and tinplate flat rolled steels, as well as tubular products and laser welded
 blanks. Dofasco's wide range of steel products is sold to customers in the
 automotive, construction, energy, manufacturing, pipe and tube, appliance,
 packaging and steel distribution industries.
 
     This News Release contains forward-looking information with respect to
 Dofasco's operations and future financial results. Actual results may differ
 from expected results for a variety of reasons including the factors discussed
 in the Management's Discussion and Analysis section of Dofasco's 2000 Annual
 Report.
 
 
 
     Consolidated Statements of Income and Retained Earnings (Unaudited)
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
                                                       Three Months Ended
                                                            March 31
     (in millions except per share amounts)           2001             2000
     -------------------------------------------------------------------------
                                                            (note 1)
     Income
       Sales                                       $   745.7        $   806.5
       Cost of sales                                   694.8            638.7
                                                  ----------------------------
 
       Gross income                                     50.9            167.8
       Depreciation and amortization                    61.8             62.1
                                                  ----------------------------
 
       Operating income (loss)                         (10.9)           105.7
       Interest on long-term debt                       14.8             13.9
       Interest and other income                        (2.1)            (8.9)
                                                  ----------------------------
 
       Income (loss) before income taxes               (23.6)           100.7
       Income tax expense (recovery)                    (4.3)            35.8
                                                  ----------------------------
 
                                                       (19.3)            64.9
       Minority interest                                (0.6)            (1.3)
                                                  ----------------------------
 
       Net income (loss)                           $   (18.7)       $    66.2
     -------------------------------------------------------------------------
 
     Earnings per Common Share
       Basic                                       $   (0.25)       $    0.85
       Diluted                                     $   (0.25)       $    0.84
     -------------------------------------------------------------------------
 
     Retained Earnings
       Balance at beginning of period              $ 1,020.8        $   968.7
       Net income (loss) for period                    (18.7)            66.2
                                                  ----------------------------
 
                                                     1,002.1          1,034.9
                                                  ----------------------------
 
       Dividends declared:
         Preferred shares                                0.1              0.1
         Common shares                                  20.2             19.4
       Premium paid on repurchase of
        common shares                                      -             13.4
                                                  ----------------------------
 
                                                        20.3             32.9
                                                  ----------------------------
 
       Balance at end of period                    $   981.8        $ 1,002.0
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Raw steel production and purchased
      semi-finished steel processed
      (net tons 000's)                                 1,307            1,257
     Steel shipments (net tons 000's)                  1,128            1,084
 
 
 
 
     Consolidated Balance Sheets
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
                                                    March 31       December 31
     (in millions)                                    2001             2000
     -------------------------------------------------------------------------
                                                   (unaudited)
     Current assets:                                        (note 1)
       Cash and cash equivalents                   $   141.8        $   127.1
       Accounts receivable                             359.7            355.6
       Inventories                                     742.6            853.5
       Income and other taxes recoverable               17.6             14.6
       Future income tax assets                          4.5              4.2
                                                  ----------------------------
                                                     1,266.2          1,355.0
                                                  ----------------------------
 
     Fixed assets                                    2,013.6          2,003.6
     Future income tax assets                           45.2             43.0
     Other assets                                      128.1            122.0
                                                  ----------------------------
                                                     2,186.9          2,168.6
     ------------------------------------------------------------------------
 
     Total assets                                  $ 3,453.1        $ 3,523.6
 
     Current liabilities:
       Bank borrowings of joint ventures           $    59.9        $    43.6
       Accounts payable and accrued charges            284.5            339.8
       Dividends payable                                20.4             20.4
       Current requirements on long-term debt          108.0            108.3
                                                  ----------------------------
                                                       472.8            512.1
                                                  ----------------------------
     Long-term liabilities:
       Long-term debt                                  584.2            597.9
       Employee non-pension benefits                   332.0            326.1
       Provision for relining blast furnaces
        and other                                       49.8             44.3
                                                  ----------------------------
                                                       966.0            968.3
                                                  ----------------------------
 
     Future income tax liabilities                     164.2            170.3
                                                  ----------------------------
 
     Minority interest                                  19.8             20.4
                                                  ----------------------------
 
     Shareholders' equity:
       Preferred shares                                 12.1             12.1
       Common shares                                   793.1            792.7
       Retained earnings                               981.8          1,020.8
       Currency translation adjustment                  43.3             26.9
                                                  ----------------------------
                                                     1,830.3          1,852.5
     -------------------------------------------------------------------------
 
     Total liabilities and shareholders' equity    $ 3,453.1        $ 3,523.6
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
 
 
 
     Consolidated Statements of Cash Flows (Unaudited)
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
                                                   Three Months Ended March 31
     (in millions)                                    2001             2000
     -------------------------------------------------------------------------
                                                            (note 1)
     Cash provided from (used for):
     Operating activities:
       Net income and charges not involving
        cash outlays                               $    46.0        $   131.9
       Changes in operating working capital             54.9           (102.9)
                                                  ----------------------------
 
                                                       100.9             29.0
     -------------------------------------------------------------------------
 
     Investment activities:
       New facilities                                  (64.4)           (48.6)
       Other investments                                 0.1             (0.2)
                                                  ----------------------------
 
                                                       (64.3)           (48.8)
     -------------------------------------------------------------------------
 
     Financing activities:
       Increase in bank borrowings                      15.4             15.6
       Repayment of long-term debt                     (17.8)           (17.9)
       Equity contribution by minority interest            -              5.1
       Common shares issued                              0.5              0.2
       Common shares repurchased                           -            (22.7)
       Dividends paid                                  (20.4)           (19.7)
                                                  ----------------------------
 
                                                       (22.3)           (39.4)
     -------------------------------------------------------------------------
 
     Effect of exchange rate changes on cash
      and cash equivalents                               0.4              0.7
     -------------------------------------------------------------------------
 
     Cash and cash equivalents:
       Increase (decrease) for the period               14.7            (58.5)
       Balance at beginning of period                  127.1            197.1
                                                  ----------------------------
 
       Balance at end of period                        141.8        $   138.6
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
 
 
 
     Notes to Interim Consolidated Financial Statements
     -------------------------------------------------------------------------
 
     Note 1 - Accounting Policies
 
     The accompanying unaudited consolidated financial statements have been
     prepared by the Corporation in accordance with accounting principles
     generally accepted in Canada on a basis consistent with those followed in
     the most recent audited financial statements, except for the method of
     computing diluted earnings per common share as described in Note 2. These
     unaudited consolidated financial statements do not include all the
     information and footnotes required by generally accepted accounting
     principles for annual financial statements and therefore should be read
     in conjunction with the audited consolidated financial statements and
     notes included in the Corporation's Annual Report for the year ended
     December 31, 2000.
 
     Note 2 - Accounting Change
 
     Effective January 1, 2001, the Corporation retroactively adopted the new
     recommendations of the CICA with respect to the computation of diluted
     earnings per common share. Under the new standards, the treasury stock
     method is used in determining the dilutive effect of options. Previously,
     the imputed earnings approach was used.
 
     As a result of this change, diluted earnings per common share for the
     first quarter of 2000 was restated from $0.83 to $0.84. This change had
     no impact on the current period.
 
     Note 3 - Acquisition
 
     The results for the quarter include the results of Powerlasers Limited
     and Powerlasers Corporation which were acquired in May 2000 for cash
     consideration of $44.8 million. The acquisition has been accounted for
     using the purchase method.
 
     Note 4 - Long-Term Debt
 
     QCM is currently in the process of renegotiating its long-term debt
     agreement to change certain conditions and extend the repayment schedule.
     The renegotiations will not be completed until current labour
     negotiations at QCM have been finalized.
 
     Depending on the terms and conditions of a revised agreement or if the
     debt agreement is not successfully renegotiated, certain deferred costs
     related to QCM's existing debt may be written off. The Corporation's
     share of this non-cash accounting charge, if incurred, would be
     approximately $11.1 million.
 
     Note 5 - Share Capital
 
     The following table summarizes information on share capital and related
     matters at March 31, 2001:
 
                                         Outstanding      Exercisable
                                         -----------      -----------
 
          Preferred shares                   121,374                -
          Common shares                   74,940,311                -
          Common share stock options       2,256,209        1,322,909
 
 
     Note 6 - Earnings per Share
 
     The reconciliation of the numerator and denominator for the
     calculation of basic and diluted earnings per share is as follows:
 
 
                                                       Three Months Ended
                                                  ----------------------------
     (in millions, except number of shares          March 31,        March 31,
     and per share amounts)                           2001             2000
                                                  -----------      -----------
 
     Net income (loss)                             $   (18.7)       $    66.2
     Less:  Preferred share dividends                   (0.1)            (0.1)
                                                  -----------      -----------
 
     Income (loss) available to common
      shareholders                                 $   (18.8)       $    66.1
                                                  -----------      -----------
 
     Basic earnings per share
 
       Weighted average number of shares
        outstanding (000's)                           74,930           78,230
                                                  -----------      -----------
 
      Basic earnings per share                     $   (0.25)       $    0.85
                                                  -----------      -----------
                                                  -----------      -----------
 
     Diluted earnings per share
 
       Weighted average number of shares
        outstanding (000's)                           74,930           78,230
       Dilutive effect of stock options (000's)            -              240
                                                  -----------      -----------
 
       Adjusted weighted average number of shares
        outstanding (000's)                           74,930           78,470
                                                  -----------      -----------
 
     Diluted earnings per share                    $   (0.25)       $    0.84
                                                  -----------      -----------
                                                  -----------      -----------
 
 
     Note 7 - Segmented Information
 
                                  Three Months Ended March 31, 2001
                       -------------------------------------------------------
                           Steel                        Intercompany   Consol.
     (in millions)     Operations(x)  Gallatin    QCM    Elimination    Total
     -------------------------------------------------------------------------
     Sales to external
      customers          $  668.0   $   55.4   $   22.3   $      -   $  745.7
     Inter-segment sales        -        4.1          -       (4.1)         -
                       -------------------------------------------------------
     Total sales         $  668.0   $   59.5   $   22.3   $   (4.1)  $  745.7
     -------------------------------------------------------------------------
 
     Gross income (loss) $   57.7   $   (1.6)  $  (10.1)  $    4.9   $   50.9
     Depreciation and
      amortization           49.0        5.7        7.1          -       61.8
     Interest on long-
      term debt              13.5        0.1        1.2          -       14.8
     Interest and other
      income                 (1.9)         -       (0.2)         -       (2.1)
                       -------------------------------------------------------
     Income (loss) before
      income taxes       $   (2.9)  $   (7.4)  $  (18.2)  $    4.9   $  (23.6)
     -------------------------------------------------------------------------
 
     Segment assets      $2,748.6   $  344.5   $  360.3   $   (0.3)  $3,453.1
     Expenditures for
      new facilities     $   61.0   $    1.4   $    2.0   $      -   $   64.4
 
 
                                  Three Months Ended March 31, 2000
                       -------------------------------------------------------
                          Steel                         Intercompany  Consol.
     (in millions)     Operations(x) Gallatin    QCM     Elimination   Total
     -------------------------------------------------------------------------
     Sales to external
      customers          $  703.6   $   57.8   $   45.1   $      -   $  806.5
     Inter-segment sales        -       12.5        5.0      (17.5)         -
                        ------------------------------------------------------
     Total sales         $  703.6   $   70.3   $   50.1   $  (17.5)  $  806.5
     -------------------------------------------------------------------------
 
     Gross income (loss) $  147.1   $   13.9   $    3.8   $    3.0   $  167.8
     Depreciation and
      amortization           49.4        5.3        7.4          -       62.1
     Interest on long-
      term debt              12.5        0.1        1.3          -       13.9
     Interest and other
      income                 (8.7)         -       (0.2)         -       (8.9)
                        ------------------------------------------------------
     Income (loss) before
      income taxes       $   93.9   $    8.5   $   (4.7)  $    3.0   $  100.7
     -------------------------------------------------------------------------
 
     Segment assets      $2,721.6   $  329.4   $  347.2   $  (10.6)  $3,387.6
     Expenditures for
      new facilities     $   45.6   $   1.2    $    1.8   $      -   $   48.6
 
     (x) Steel Operations include Hamilton operations, Dofasco USA,
         Powerlasers, DoSol Galva, Dofasco de Mexico, and Dofasco's share of
         Baycoat, DNN, Sorevco and Wabush.
 
 
     Consolidated Geographic Information
 
                              Three Months Ended         Three Months Ended
                                March 31, 2001             March 31, 2000
                           ------------------------   ------------------------
                                            Fixed                     Fixed
                               Sales        Assets        Sales       Assets
     -------------------------------------------------------------------------
     Canada                $    573.9   $   1,727.1   $    627.6  $   1,739.7
     United States              134.0         266.9        133.5        238.4
     Other countries             37.8          19.6         45.4            -
                           ---------------------------------------------------
     Total                 $    745.7   $   2,013.6   $    806.5  $   1,978.1
     -------------------------------------------------------------------------
 
 
 
 
                          - SUPPLEMENTARY INFORMATION -
 
     Segmented Information (Unaudited)                            Dofasco Inc.
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
        (in millions except shipments
        and per ton amounts)                  2001              2000
     -------------------------------------------------------------------------
                                              First      Fourth       First
                                             Quarter     Quarter     Quarter
                                            ----------------------------------
     Sales
 
        Quebec Cartier Mining               $    22.3   $    79.0   $    50.1
        Gallatin                                 59.5        47.9        70.3
        Steel Operations(x)                     668.0       683.7       703.6
        Intercompany Elimination                 (4.1)      (51.7)      (17.5)
     -------------------------------------------------------------------------
     Consolidated Sales                     $   745.7   $   758.9   $   806.5
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Cost of Sales
 
        Quebec Cartier Mining               $    32.4   $    65.7   $    46.3
        Gallatin                                 61.1        50.5        56.4
        Steel Operations(x)                     610.3       602.9       556.5
        Intercompany Elimination                 (9.0)      (46.3)      (20.5)
     -------------------------------------------------------------------------
     Consolidated Cost of Sales             $   694.8   $   672.8   $   638.7
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Gross Income
 
        Quebec Cartier Mining               $   (10.1)  $    13.3   $     3.8
        Gallatin                                 (1.6)       (2.6)       13.9
        Steel Operations(x)                      57.7        80.8       147.1
        Intercompany Elimination                  4.9        (5.4)        3.0
     -------------------------------------------------------------------------
     Consolidated Gross Income              $    50.9   $    86.1   $   167.8
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Depreciation & Amortization
 
        Quebec Cartier Mining               $     7.1   $     7.7   $     7.4
        Gallatin                                  5.7         5.2         5.3
        Steel Operations(x)                      49.0        52.8        49.4
     -------------------------------------------------------------------------
     Consolidated Depreciation
      & Amortization                        $    61.8   $    65.7   $    62.1
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Interest on Long-Term Debt
 
        Quebec Cartier Mining               $     1.2   $     1.3   $     1.3
        Gallatin                                  0.1         0.1         0.1
        Steel Operations(x)                      13.5        14.9        12.5
     -------------------------------------------------------------------------
     Consolidated Interest on
      Long-Term Debt                        $    14.8   $    16.3   $    13.9
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Interest and Other Income
 
        Quebec Cartier Mining               $     0.2   $     0.3   $     0.2
        Gallatin                                    -           -           -
        Steel Operations(x)                       1.9         2.0         8.7
     -------------------------------------------------------------------------
     Consolidated Interest and
      Other Income                          $     2.1   $     2.3   $     8.9
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Gain on Sale of Investment
 
        Steel Operations(x)                 $       -   $       -   $       -
     -------------------------------------------------------------------------
     Consolidated Gain on Sale
      of Investment                         $       -   $       -   $       -
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Income (Loss) Before Income Taxes
        Quebec Cartier Mining               $   (18.2)  $     4.6   $    (4.7)
        Gallatin                                 (7.4)       (7.9)        8.5
        Steel Operations(x)                      (2.9)       15.1        93.9
        Intercompany Elimination                  4.9        (5.4)        3.0
     -------------------------------------------------------------------------
     Consolidated Income Before Income
      Taxes                                 $   (23.6)  $     6.4   $   100.7
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
     Shipments
 
        QCM Iron Ore (000's tonnes)(xx)           668       1,967       1,420
                                            ----------------------------------
                                            ----------------------------------
        Steel Shipments
           Gallatin (000's net tons)(xx)          168         136         154
           Hamilton & DSG Operations
            (000's net tons)                      960         985         930
           Intercorporate (000's net tons)          -           -           -
     -------------------------------------------------------------------------
        Total Steel Shipments                   1,128       1,121       1,084
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Sales Per Ton
 
        Quebec Cartier Mining               $      33   $      40   $      35
        Gallatin                            $     354   $     355   $     456
        Steel Operations(x)                 $     696   $     694   $     757
 
     Gross Income Per Ton
 
        Quebec Cartier Mining               $     (15)  $       7   $       3
        Gallatin                            $      (9)  $     (19)  $      90
        Steel Operations(x)                 $      60   $      82   $     158
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
     Number of common shares outstanding:
        Period-end (000's)                     74,940      74,920      77,730
        Year-to-date weighted average
         (000's)                               74,930      76,293      78,107
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
      (x) Steel Operations include Hamilton operations, Dofasco USA,
          Powerlasers, DoSol Galva, Dofasco de Mexico and Dofasco's share of
          Baycoat, DNN, Sorevco and Wabush.
     (xx) Represents Dofasco's 50% share.
 
 
 
     Corporate information
     -------------------------------------------------------------------------
 
     For information concerning share ownership or dividends,
     please contact our transfer agent:
 
       CIBC Mellon Trust Company
       320 Bay Street
       P.O. Box 1
       Toronto, Ontario
       M5H 4A6
 
       Answerline                          416-643-5500
       Toll Free in Canada and the U.S.    1-800-387-0825
       E-Mail Address                      inquiries@cibcmellon.ca
 
 
 
     When contacting Dofasco, please direct
     inquiries to:
 
        The Corporate Secretary
        Dofasco Inc.
        P.O. Box 2460
        Hamilton, Ontario
        L8N 3J5
 
        905-544-3761 or 1-800-DOFASCO (363-2726)
        E-Mail Address:  corpsec@dofasco.ca
        Website:  www.dofasco.ca
 
 
     Copies of Dofasco's investor Quarterly Fact Book can be obtained on the
     Dofasco website or, upon request, by telephone or e-mail.
 
 

SOURCE Dofasco Inc.
    HAMILTON, ON, April 26 /PRNewswire/ - Dofasco Inc. released its results
 for the first quarter of 2001 today, announcing a loss consistent with its
 outlook from the previous quarter and within the company's range of
 expectations given the condition of North American steel markets resulting
 from the current market correction.
     Commenting on the quarter, Dofasco's President and Chief Executive
 Officer John Mayberry said, "This was a quarter in which Dofasco and Dofasco
 people differentiated themselves in their ability to respond to the conditions
 that have impacted the entire North American steel industry. Dofasco continued
 to generate excellent cash flow, in excess of $100 million during the quarter,
 and actually increased consolidated shipments by 44,000 tons compared to the
 first quarter a year ago in a North American steel industry that is generally
 operating at less than 80% of capacity. At the same time, Dofasco's employees
 responded promptly and effectively with significant cost reduction initiatives
 at our Hamilton operations, the effect of which will be more fully reflected
 in our results later in the year."
     For the three months ended March 31, 2001, Dofasco's consolidated loss
 was $18.7 million. After deducting preferred share dividends, the loss
 attributable to common shares was $0.25 per share. In the first quarter of
 2000, consolidated net income was $66.2 million and earnings per share were
 $0.85. Consolidated sales in the quarter declined to $745.7 million from
 $806.5 million in the first quarter of 2000, despite an increase in shipments
 from 1,084,000 tons to 1,128,000 tons.
     Quebec Cartier Mining Company (QCM), Dofasco's joint venture iron ore
 mining operation in Quebec, was the most significant contributor to the loss,
 accounting for more than 75% of Dofasco's consolidated pre-tax loss in the
 first quarter. QCM implemented a number of shutdowns in response to reduced
 European demand and subsequently suspended all operations after being unable
 to reach a new labour agreement with its employees.
     Dofasco's 50% share of QCM's loss before taxes in the quarter was $18.2
 million, a significant increase from a loss before taxes of $4.7 million in
 the first quarter of 2000. As a result of production disruptions during the
 quarter, QCM's shipments declined to 1.34 million tonnes from 2.84 million
 tonnes in the first quarter of 2000. Totals sales revenue declined by more
 than 50% from the same period last year.
     On April 24th, QCM reached an agreement in principle with its union to
 resolve their labour dispute. The union's negotiating committee is expected to
 unanimously recommend acceptance of the tentative agreement and a ratification
 vote will be held April 27th.
     Dofasco's Steel Operations segment, which includes the Hamilton
 operations, reported a pre-tax loss of $2.9 million in the quarter, compared
 to income before taxes of $93.9 million for the first quarter of 2000.
 Shipments from Hamilton were 960,000 tons, up from 930,000 tons in the same
 period last year. The average revenue per ton shipped in the quarter was more
 than $60 per ton below last year's first quarter, as selling prices in the
 market declined to compete with unfairly traded imports.
     Mr. Mayberry continued, "While the loss of $60 per ton fell directly to
 our bottom line, the reverse will also be true. Even small improvements in
 pricing have the potential to significantly improve our profitability, given
 our low cost structure."
     Dofasco's 50% share of Gallatin Steel's pre-tax loss for the first
 quarter of 2001 was $7.4 million, compared to income before taxes of $8.5
 million in the first quarter of 2000. Gallatin had a strong operating
 performance in the quarter, shipping 336,000 tons compared to 308,000 tons in
 the first quarter a year earlier. As a result of operating at capacity
 throughout the quarter, Gallatin's cost performance was excellent. Gallatin's
 loss is primarily attributable to lower hot rolled steel selling prices. Their
 average revenue was more than $100 per ton below the level of the first
 quarter of 2000.
     Recent findings by Canadian and U.S. trade monitoring agencies should
 help address the impact of unfairly traded imports on pricing levels in North
 American steel markets. Earlier this month, the Canada Customs and Revenue
 Agency announced preliminary dumping duties to apply to shipments of imports
 of hot rolled steel into Canada from 12 countries and the U.S. Department of
 Commerce announced preliminary dumping duties on shipments of hot rolled steel
 from 11 countries.
     Looking forward, Mr. Mayberry said, "We believe this short-term pain will
 become Dofasco's long-term gain as the market improves. We have continued to
 grow our business throughout the market correction by sustaining our
 commitment to meeting the needs of our customers and by virtue of our strong
 balance sheet and operational flexibility. Dofasco is well poised to benefit
 disproportionately as market conditions improve, and we continue to invest for
 future growth."
     Dofasco is a leading North American steel solutions provider. Product
 lines include hot rolled, cold rolled, galvanized, Extragal(TM), Galvalume(TM)
 and tinplate flat rolled steels, as well as tubular products and laser welded
 blanks. Dofasco's wide range of steel products is sold to customers in the
 automotive, construction, energy, manufacturing, pipe and tube, appliance,
 packaging and steel distribution industries.
 
     This News Release contains forward-looking information with respect to
 Dofasco's operations and future financial results. Actual results may differ
 from expected results for a variety of reasons including the factors discussed
 in the Management's Discussion and Analysis section of Dofasco's 2000 Annual
 Report.
 
 
 
     Consolidated Statements of Income and Retained Earnings (Unaudited)
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
                                                       Three Months Ended
                                                            March 31
     (in millions except per share amounts)           2001             2000
     -------------------------------------------------------------------------
                                                            (note 1)
     Income
       Sales                                       $   745.7        $   806.5
       Cost of sales                                   694.8            638.7
                                                  ----------------------------
 
       Gross income                                     50.9            167.8
       Depreciation and amortization                    61.8             62.1
                                                  ----------------------------
 
       Operating income (loss)                         (10.9)           105.7
       Interest on long-term debt                       14.8             13.9
       Interest and other income                        (2.1)            (8.9)
                                                  ----------------------------
 
       Income (loss) before income taxes               (23.6)           100.7
       Income tax expense (recovery)                    (4.3)            35.8
                                                  ----------------------------
 
                                                       (19.3)            64.9
       Minority interest                                (0.6)            (1.3)
                                                  ----------------------------
 
       Net income (loss)                           $   (18.7)       $    66.2
     -------------------------------------------------------------------------
 
     Earnings per Common Share
       Basic                                       $   (0.25)       $    0.85
       Diluted                                     $   (0.25)       $    0.84
     -------------------------------------------------------------------------
 
     Retained Earnings
       Balance at beginning of period              $ 1,020.8        $   968.7
       Net income (loss) for period                    (18.7)            66.2
                                                  ----------------------------
 
                                                     1,002.1          1,034.9
                                                  ----------------------------
 
       Dividends declared:
         Preferred shares                                0.1              0.1
         Common shares                                  20.2             19.4
       Premium paid on repurchase of
        common shares                                      -             13.4
                                                  ----------------------------
 
                                                        20.3             32.9
                                                  ----------------------------
 
       Balance at end of period                    $   981.8        $ 1,002.0
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Raw steel production and purchased
      semi-finished steel processed
      (net tons 000's)                                 1,307            1,257
     Steel shipments (net tons 000's)                  1,128            1,084
 
 
 
 
     Consolidated Balance Sheets
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
                                                    March 31       December 31
     (in millions)                                    2001             2000
     -------------------------------------------------------------------------
                                                   (unaudited)
     Current assets:                                        (note 1)
       Cash and cash equivalents                   $   141.8        $   127.1
       Accounts receivable                             359.7            355.6
       Inventories                                     742.6            853.5
       Income and other taxes recoverable               17.6             14.6
       Future income tax assets                          4.5              4.2
                                                  ----------------------------
                                                     1,266.2          1,355.0
                                                  ----------------------------
 
     Fixed assets                                    2,013.6          2,003.6
     Future income tax assets                           45.2             43.0
     Other assets                                      128.1            122.0
                                                  ----------------------------
                                                     2,186.9          2,168.6
     ------------------------------------------------------------------------
 
     Total assets                                  $ 3,453.1        $ 3,523.6
 
     Current liabilities:
       Bank borrowings of joint ventures           $    59.9        $    43.6
       Accounts payable and accrued charges            284.5            339.8
       Dividends payable                                20.4             20.4
       Current requirements on long-term debt          108.0            108.3
                                                  ----------------------------
                                                       472.8            512.1
                                                  ----------------------------
     Long-term liabilities:
       Long-term debt                                  584.2            597.9
       Employee non-pension benefits                   332.0            326.1
       Provision for relining blast furnaces
        and other                                       49.8             44.3
                                                  ----------------------------
                                                       966.0            968.3
                                                  ----------------------------
 
     Future income tax liabilities                     164.2            170.3
                                                  ----------------------------
 
     Minority interest                                  19.8             20.4
                                                  ----------------------------
 
     Shareholders' equity:
       Preferred shares                                 12.1             12.1
       Common shares                                   793.1            792.7
       Retained earnings                               981.8          1,020.8
       Currency translation adjustment                  43.3             26.9
                                                  ----------------------------
                                                     1,830.3          1,852.5
     -------------------------------------------------------------------------
 
     Total liabilities and shareholders' equity    $ 3,453.1        $ 3,523.6
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
 
 
 
     Consolidated Statements of Cash Flows (Unaudited)
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
                                                   Three Months Ended March 31
     (in millions)                                    2001             2000
     -------------------------------------------------------------------------
                                                            (note 1)
     Cash provided from (used for):
     Operating activities:
       Net income and charges not involving
        cash outlays                               $    46.0        $   131.9
       Changes in operating working capital             54.9           (102.9)
                                                  ----------------------------
 
                                                       100.9             29.0
     -------------------------------------------------------------------------
 
     Investment activities:
       New facilities                                  (64.4)           (48.6)
       Other investments                                 0.1             (0.2)
                                                  ----------------------------
 
                                                       (64.3)           (48.8)
     -------------------------------------------------------------------------
 
     Financing activities:
       Increase in bank borrowings                      15.4             15.6
       Repayment of long-term debt                     (17.8)           (17.9)
       Equity contribution by minority interest            -              5.1
       Common shares issued                              0.5              0.2
       Common shares repurchased                           -            (22.7)
       Dividends paid                                  (20.4)           (19.7)
                                                  ----------------------------
 
                                                       (22.3)           (39.4)
     -------------------------------------------------------------------------
 
     Effect of exchange rate changes on cash
      and cash equivalents                               0.4              0.7
     -------------------------------------------------------------------------
 
     Cash and cash equivalents:
       Increase (decrease) for the period               14.7            (58.5)
       Balance at beginning of period                  127.1            197.1
                                                  ----------------------------
 
       Balance at end of period                        141.8        $   138.6
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
 
 
 
     Notes to Interim Consolidated Financial Statements
     -------------------------------------------------------------------------
 
     Note 1 - Accounting Policies
 
     The accompanying unaudited consolidated financial statements have been
     prepared by the Corporation in accordance with accounting principles
     generally accepted in Canada on a basis consistent with those followed in
     the most recent audited financial statements, except for the method of
     computing diluted earnings per common share as described in Note 2. These
     unaudited consolidated financial statements do not include all the
     information and footnotes required by generally accepted accounting
     principles for annual financial statements and therefore should be read
     in conjunction with the audited consolidated financial statements and
     notes included in the Corporation's Annual Report for the year ended
     December 31, 2000.
 
     Note 2 - Accounting Change
 
     Effective January 1, 2001, the Corporation retroactively adopted the new
     recommendations of the CICA with respect to the computation of diluted
     earnings per common share. Under the new standards, the treasury stock
     method is used in determining the dilutive effect of options. Previously,
     the imputed earnings approach was used.
 
     As a result of this change, diluted earnings per common share for the
     first quarter of 2000 was restated from $0.83 to $0.84. This change had
     no impact on the current period.
 
     Note 3 - Acquisition
 
     The results for the quarter include the results of Powerlasers Limited
     and Powerlasers Corporation which were acquired in May 2000 for cash
     consideration of $44.8 million. The acquisition has been accounted for
     using the purchase method.
 
     Note 4 - Long-Term Debt
 
     QCM is currently in the process of renegotiating its long-term debt
     agreement to change certain conditions and extend the repayment schedule.
     The renegotiations will not be completed until current labour
     negotiations at QCM have been finalized.
 
     Depending on the terms and conditions of a revised agreement or if the
     debt agreement is not successfully renegotiated, certain deferred costs
     related to QCM's existing debt may be written off. The Corporation's
     share of this non-cash accounting charge, if incurred, would be
     approximately $11.1 million.
 
     Note 5 - Share Capital
 
     The following table summarizes information on share capital and related
     matters at March 31, 2001:
 
                                         Outstanding      Exercisable
                                         -----------      -----------
 
          Preferred shares                   121,374                -
          Common shares                   74,940,311                -
          Common share stock options       2,256,209        1,322,909
 
 
     Note 6 - Earnings per Share
 
     The reconciliation of the numerator and denominator for the
     calculation of basic and diluted earnings per share is as follows:
 
 
                                                       Three Months Ended
                                                  ----------------------------
     (in millions, except number of shares          March 31,        March 31,
     and per share amounts)                           2001             2000
                                                  -----------      -----------
 
     Net income (loss)                             $   (18.7)       $    66.2
     Less:  Preferred share dividends                   (0.1)            (0.1)
                                                  -----------      -----------
 
     Income (loss) available to common
      shareholders                                 $   (18.8)       $    66.1
                                                  -----------      -----------
 
     Basic earnings per share
 
       Weighted average number of shares
        outstanding (000's)                           74,930           78,230
                                                  -----------      -----------
 
      Basic earnings per share                     $   (0.25)       $    0.85
                                                  -----------      -----------
                                                  -----------      -----------
 
     Diluted earnings per share
 
       Weighted average number of shares
        outstanding (000's)                           74,930           78,230
       Dilutive effect of stock options (000's)            -              240
                                                  -----------      -----------
 
       Adjusted weighted average number of shares
        outstanding (000's)                           74,930           78,470
                                                  -----------      -----------
 
     Diluted earnings per share                    $   (0.25)       $    0.84
                                                  -----------      -----------
                                                  -----------      -----------
 
 
     Note 7 - Segmented Information
 
                                  Three Months Ended March 31, 2001
                       -------------------------------------------------------
                           Steel                        Intercompany   Consol.
     (in millions)     Operations(x)  Gallatin    QCM    Elimination    Total
     -------------------------------------------------------------------------
     Sales to external
      customers          $  668.0   $   55.4   $   22.3   $      -   $  745.7
     Inter-segment sales        -        4.1          -       (4.1)         -
                       -------------------------------------------------------
     Total sales         $  668.0   $   59.5   $   22.3   $   (4.1)  $  745.7
     -------------------------------------------------------------------------
 
     Gross income (loss) $   57.7   $   (1.6)  $  (10.1)  $    4.9   $   50.9
     Depreciation and
      amortization           49.0        5.7        7.1          -       61.8
     Interest on long-
      term debt              13.5        0.1        1.2          -       14.8
     Interest and other
      income                 (1.9)         -       (0.2)         -       (2.1)
                       -------------------------------------------------------
     Income (loss) before
      income taxes       $   (2.9)  $   (7.4)  $  (18.2)  $    4.9   $  (23.6)
     -------------------------------------------------------------------------
 
     Segment assets      $2,748.6   $  344.5   $  360.3   $   (0.3)  $3,453.1
     Expenditures for
      new facilities     $   61.0   $    1.4   $    2.0   $      -   $   64.4
 
 
                                  Three Months Ended March 31, 2000
                       -------------------------------------------------------
                          Steel                         Intercompany  Consol.
     (in millions)     Operations(x) Gallatin    QCM     Elimination   Total
     -------------------------------------------------------------------------
     Sales to external
      customers          $  703.6   $   57.8   $   45.1   $      -   $  806.5
     Inter-segment sales        -       12.5        5.0      (17.5)         -
                        ------------------------------------------------------
     Total sales         $  703.6   $   70.3   $   50.1   $  (17.5)  $  806.5
     -------------------------------------------------------------------------
 
     Gross income (loss) $  147.1   $   13.9   $    3.8   $    3.0   $  167.8
     Depreciation and
      amortization           49.4        5.3        7.4          -       62.1
     Interest on long-
      term debt              12.5        0.1        1.3          -       13.9
     Interest and other
      income                 (8.7)         -       (0.2)         -       (8.9)
                        ------------------------------------------------------
     Income (loss) before
      income taxes       $   93.9   $    8.5   $   (4.7)  $    3.0   $  100.7
     -------------------------------------------------------------------------
 
     Segment assets      $2,721.6   $  329.4   $  347.2   $  (10.6)  $3,387.6
     Expenditures for
      new facilities     $   45.6   $   1.2    $    1.8   $      -   $   48.6
 
     (x) Steel Operations include Hamilton operations, Dofasco USA,
         Powerlasers, DoSol Galva, Dofasco de Mexico, and Dofasco's share of
         Baycoat, DNN, Sorevco and Wabush.
 
 
     Consolidated Geographic Information
 
                              Three Months Ended         Three Months Ended
                                March 31, 2001             March 31, 2000
                           ------------------------   ------------------------
                                            Fixed                     Fixed
                               Sales        Assets        Sales       Assets
     -------------------------------------------------------------------------
     Canada                $    573.9   $   1,727.1   $    627.6  $   1,739.7
     United States              134.0         266.9        133.5        238.4
     Other countries             37.8          19.6         45.4            -
                           ---------------------------------------------------
     Total                 $    745.7   $   2,013.6   $    806.5  $   1,978.1
     -------------------------------------------------------------------------
 
 
 
 
                          - SUPPLEMENTARY INFORMATION -
 
     Segmented Information (Unaudited)                            Dofasco Inc.
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
        (in millions except shipments
        and per ton amounts)                  2001              2000
     -------------------------------------------------------------------------
                                              First      Fourth       First
                                             Quarter     Quarter     Quarter
                                            ----------------------------------
     Sales
 
        Quebec Cartier Mining               $    22.3   $    79.0   $    50.1
        Gallatin                                 59.5        47.9        70.3
        Steel Operations(x)                     668.0       683.7       703.6
        Intercompany Elimination                 (4.1)      (51.7)      (17.5)
     -------------------------------------------------------------------------
     Consolidated Sales                     $   745.7   $   758.9   $   806.5
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Cost of Sales
 
        Quebec Cartier Mining               $    32.4   $    65.7   $    46.3
        Gallatin                                 61.1        50.5        56.4
        Steel Operations(x)                     610.3       602.9       556.5
        Intercompany Elimination                 (9.0)      (46.3)      (20.5)
     -------------------------------------------------------------------------
     Consolidated Cost of Sales             $   694.8   $   672.8   $   638.7
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Gross Income
 
        Quebec Cartier Mining               $   (10.1)  $    13.3   $     3.8
        Gallatin                                 (1.6)       (2.6)       13.9
        Steel Operations(x)                      57.7        80.8       147.1
        Intercompany Elimination                  4.9        (5.4)        3.0
     -------------------------------------------------------------------------
     Consolidated Gross Income              $    50.9   $    86.1   $   167.8
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Depreciation & Amortization
 
        Quebec Cartier Mining               $     7.1   $     7.7   $     7.4
        Gallatin                                  5.7         5.2         5.3
        Steel Operations(x)                      49.0        52.8        49.4
     -------------------------------------------------------------------------
     Consolidated Depreciation
      & Amortization                        $    61.8   $    65.7   $    62.1
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Interest on Long-Term Debt
 
        Quebec Cartier Mining               $     1.2   $     1.3   $     1.3
        Gallatin                                  0.1         0.1         0.1
        Steel Operations(x)                      13.5        14.9        12.5
     -------------------------------------------------------------------------
     Consolidated Interest on
      Long-Term Debt                        $    14.8   $    16.3   $    13.9
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Interest and Other Income
 
        Quebec Cartier Mining               $     0.2   $     0.3   $     0.2
        Gallatin                                    -           -           -
        Steel Operations(x)                       1.9         2.0         8.7
     -------------------------------------------------------------------------
     Consolidated Interest and
      Other Income                          $     2.1   $     2.3   $     8.9
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Gain on Sale of Investment
 
        Steel Operations(x)                 $       -   $       -   $       -
     -------------------------------------------------------------------------
     Consolidated Gain on Sale
      of Investment                         $       -   $       -   $       -
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Income (Loss) Before Income Taxes
        Quebec Cartier Mining               $   (18.2)  $     4.6   $    (4.7)
        Gallatin                                 (7.4)       (7.9)        8.5
        Steel Operations(x)                      (2.9)       15.1        93.9
        Intercompany Elimination                  4.9        (5.4)        3.0
     -------------------------------------------------------------------------
     Consolidated Income Before Income
      Taxes                                 $   (23.6)  $     6.4   $   100.7
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
     Shipments
 
        QCM Iron Ore (000's tonnes)(xx)           668       1,967       1,420
                                            ----------------------------------
                                            ----------------------------------
        Steel Shipments
           Gallatin (000's net tons)(xx)          168         136         154
           Hamilton & DSG Operations
            (000's net tons)                      960         985         930
           Intercorporate (000's net tons)          -           -           -
     -------------------------------------------------------------------------
        Total Steel Shipments                   1,128       1,121       1,084
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
     Sales Per Ton
 
        Quebec Cartier Mining               $      33   $      40   $      35
        Gallatin                            $     354   $     355   $     456
        Steel Operations(x)                 $     696   $     694   $     757
 
     Gross Income Per Ton
 
        Quebec Cartier Mining               $     (15)  $       7   $       3
        Gallatin                            $      (9)  $     (19)  $      90
        Steel Operations(x)                 $      60   $      82   $     158
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
     Number of common shares outstanding:
        Period-end (000's)                     74,940      74,920      77,730
        Year-to-date weighted average
         (000's)                               74,930      76,293      78,107
     -------------------------------------------------------------------------
     -------------------------------------------------------------------------
 
      (x) Steel Operations include Hamilton operations, Dofasco USA,
          Powerlasers, DoSol Galva, Dofasco de Mexico and Dofasco's share of
          Baycoat, DNN, Sorevco and Wabush.
     (xx) Represents Dofasco's 50% share.
 
 
 
     Corporate information
     -------------------------------------------------------------------------
 
     For information concerning share ownership or dividends,
     please contact our transfer agent:
 
       CIBC Mellon Trust Company
       320 Bay Street
       P.O. Box 1
       Toronto, Ontario
       M5H 4A6
 
       Answerline                          416-643-5500
       Toll Free in Canada and the U.S.    1-800-387-0825
       E-Mail Address                      inquiries@cibcmellon.ca
 
 
 
     When contacting Dofasco, please direct
     inquiries to:
 
        The Corporate Secretary
        Dofasco Inc.
        P.O. Box 2460
        Hamilton, Ontario
        L8N 3J5
 
        905-544-3761 or 1-800-DOFASCO (363-2726)
        E-Mail Address:  corpsec@dofasco.ca
        Website:  www.dofasco.ca
 
 
     Copies of Dofasco's investor Quarterly Fact Book can be obtained on the
     Dofasco website or, upon request, by telephone or e-mail.
 
 SOURCE Dofasco Inc.