Mechel Reports the 2012 Financial Results

Mechel Reports the 2012 Financial Results

                      Revenue amounted to $11.3 billion

            Consolidated adjusted EBITDA amounted to $1.3 billion

 Net loss attributable to shareholders of Mechel OAO amounted to $1.7 billion

MOSCOW, April 15, 2013 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), a leading
Russian mining and steel group, today announced financial results for the full
year 2012.

Evgeny Mikhel, Mechel OAO's Chief Executive Officer, commented on the 2012
financial results:

"Last year the Group operated as key markets for mining products continued to
weaken against a background of general world economic volatility. This is
reflected in the worsening of the financial results of our main activities, as
well as the need to book reserves and make several significant write-offs. At
the same time, with respect to most of our key operational indicators Mechel
demonstrated positive dynamics in 2012. Last year we also managed to do much
for further improvement going forward. It is important that despite negative
pricing trends our efforts at optimizing our sales and product mix as well as
working capital management lead to a record operating cash flow of more than
$1.3 bn, which allowed to finance our entire CAPEX at the same time repaying
some debt.

"In line with the renewed strategy, aimed at deleveraging, we have already
sold a large number of those assets that had the most negative impact on our
financial results. We continue talks on selling the remainder of our
non-strategic assets. We were also successful in improving our debt structure
and continue working on it by decreasing the share of short-term debt. We are
sure that the steps we are undertaking with a focus on maximizing shareholder
value, will have their positive effect very shortly."

Consolidated Results For The Full Year 2012                    
                                                             
US$ thousand                  FY 2012 ^(1)     FY 2011 ^(1)(4)  Change Y-on-Y
Revenue from external         11,274,933       12,541,145       -10.1%
customers
Intersegment sales            1,556,687        2,034,643        -23.5%
Operating (loss) / income     (897,875)        1,840,104        --
Operating margin              -8.0%            14.7%            --
Net (loss) / income
attributable to shareholders  (1,664,568)      727,885          --
of Mechel OAO
Adjusted net income^(1) (2)  23,044           736,255          -96.9%
Adjusted EBITDA ^(1) (3)      1,332,055        2,396,673        -44.4%
Adjusted EBITDA, margin ^(1)  11.8%            19.1%            --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, loss from discontinued operations, forex
gain/(loss), net result on the disposal of non-current assets, impairment of
long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income.
^(4)^ Adjusted to effect from discontinued operations


                                                            
US$ thousand                4Q 2012 ^(1)    3Q 2012 ^(1)(4)    Change Q-on-Q
Revenue from external       2,521,449       2,711,398          -7.0%
customers
Intersegment sales          355,978         350,039            1.7%
Operating (loss) / income   (933,369)       129,409            --
Operating margin            -37.0%          4.8%               --
Net (loss) / income
attributable to             (1,114,473)     54,911             --
shareholders of Mechel OAO
Adjusted net income /       (160,860)       134,126            --
(loss) ^(1) (2)
Adjusted EBITDA ^(1) (3)    100,389         375,626            -73.3%
Adjusted EBITDA, margin     4.0%            13.9%              --
^(1)
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, loss from discontinued operations, forex
gain/(loss), net result on the disposal of non-current assets, impairment of
long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest
income.
^(4)^ Adjusted to effect from discontinued operations

The net revenue in 2012 decreased by 10.1% and amounted to $11.3 billion
compared to $12.5 billion in 2011. The operating loss amounted to $897.9
million or -8% of the net revenue, compared to the operating income of
$1,840.1 million or 14.7% of the net revenue in 2011.

In 2012 Mechel's consolidated net loss attributable to shareholders of Mechel
OAO comprised $1.7 billion compared to the net income of $727.9 million in
2011. Excluding the effects of impairment of long-lived assets and goodwill,
loss from discontinued operations and provision for amounts due from related
parties (net of deferred taxes related to non controlling interests) the
adjusted net profit amounts to $23.0 million in 2012.

The consolidated adjusted EBITDA in 2012 decreased by 44.4% to $1.3 billion,
compared to $2.4 billion in 2011. Depreciation, depletion and amortization in
2012 for the Company were $586.2 million, an increase of 5.4% compared to
$556.4 million in 2011.

Mining Segment Results For Full Year 2012                      
                                                            
US$ thousand                 FY 2012 ^(1)    FY 2011 ^(1)(5)   Change Y-on-Y
Revenue from external        3,297,560       4,173,799         -21.0%
customers
Intersegment sales           717,495         1,018,229         -29.5%
Operating income             664,278         1,691,385         -61.9%
Net income attributable to   360,770         1,069,892         -66.3%
shareholders of Mechel OAO
Adjusted net income ^(1) (2) 383,438         1,069,892         -64.2%
Adjusted EBITDA^(1) (3)      998,285         2,023,827         -50.7%
Adjusted EBITDA, margin ^(4) 24.9%           39.0%             --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, loss from discontinued operations, forex
gain/(loss), net result on the disposal of non-current assets, impairment of
long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.
^(5)^ Adjusted to effect from discontinued operations


                                                            
US$ thousand                  4Q 2012 ^(1)   3Q 2012 ^(1)(5)   Change Q-on-Q
Revenue from external         675,999        780,884           -13.4%
customers
Intersegment sales            143,283        168,284           -14.9%
Operating income / (loss)     (24,116)       200,256           --
Net (loss)/ income
attributable to shareholders  (67,475)       216,765           --
of Mechel OAO
Adjusted net (loss) / income  (67,486)       218,739           --
^(1) (2)
Adjusted EBITDA^(1) (3)       33,108         305,156           -89.2%
Adjusted EBITDA, margin ^(4)  4.0%           32.2%             --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, loss from discontinued operations, impairment
of long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales
^(5)^ Adjusted to effect from discontinued operations

Mining Segment Output and Sales For The Full Year 2012

Production:                                        
Product name       FY 2012,         FY 2011,         FY 2012 vs.
                   thousand tonnes* thousand tonnes* FY 2011, %
Coal (run-of-mine) 27,763           27,625           1%



Product Sales:                                                   
                                               FY 2012,  FY 2011,  FY 2012 vs.
Product name                                   thousand  thousand  FY 2011, %
                                               tonnes*   tonnes*
Coking coal concentrate                        11,548    12,511    -8%
Including coking coal concentrate supplied to  2,590     2,876     -10%
Mechelenterprises
PCI                                            2,423     1,969     23%
Anthracites                                    2,330     2,344     -1%
Including anthracites supplied to              201       304       -34%
Mechelenterprises
Steam coal                                     5,977     6,438     -7%
Including steam coal supplied to               1,472     1,102     34%
Mechelenterprises
Iron ore concentrate                           4,429     4,404     1%
Including iron ore concentrate supplied to     272       1,693     -84%
Mechelenterprises
Coke                                           3,561     3,457     3%
Including coke supplied to Mechel enterprises  2,448     2,415     1%
* Adjusted to effect from discontinued
operations.

The mining segment's revenue from external customers in 2012 totaled $3.3
billion, or 29% of consolidated net revenue, a decrease of 21.0% over the
segment's revenue from external customers of $4.2 billion, or 33% of
consolidated net revenue in 2011.

Operating income in the mining segment in 2012 decreased by 61.9% to $644.3
million, or 16.1% of the segment's total revenue, compared to an operating
income of $1,691.4 million, or 32.6% of total segment revenue for 2011. The
2012 adjusted EBITDA in the mining segment decreased by 50.7% and amounted to
$998.3 million compared to segment's adjusted EBITDA of $2.0 billion in 2011.
The adjusted EBITDA margin for the mining segment in 2012 was 24.9% compared
to 39.0% in 2011. Depreciation, depletion and amortization in the mining
segment amounted to $317.0 million which is 3.5% lower than $328.5 million in
2011.

Mechel Mining Management Company OOO's Chief Executive Officer Boris
Nikishichev commented on the mining division's results:

"The past year was complicated for the mining division and required maximum
mobilization of our resources and making difficult managerial decisions in
order to retain positions gained earlier. Unsolved global economic problems
continued to have a negative impact on the mining industry, which led to a
significant drop in prices on practically all mining products as well as a
decrease in demand in our traditional European and CIS markets.

"In these conditions, we concentrated on cost control and re-orienting sales
toward alternative markets. The division's enterprises once again proved that
they have great resilience and can demonstrate good operational results even
in critical conditions. For example, Southern Kuzbass Coal Company managed to
compensate the drop in underground mining by an increase in open-pit mining,
while Yakutugol increased production by 20% compared to 2011, reaching 10
million tonnes of coal a year, which enabled us to compensate for the
temporary stoppage of several assets of our US subsidiary Mechel Bluestone in
late 2012, and attain positive production dynamics over the division as a
whole.

"Despite a significant decrease in our capital spending program in 2012, we
continued investing in our production assets. Southern Kuzbass Coal Company
and Korshunov Mining Plant acquired new coal transport equipment. Completed
works on boring and reinforcing the vertical shaft as part of constructing
Sibirginskaya Mine's second line. At the Elga deposit, last year construction
of a seasonal washing plant was completed. Production of coking coal
concentrate at this plant directly near the open pit enables the company to
test and perfect the technology of washing Elga coals for further use when
constructing the regular washing plant. In order to implement the project, we
are concluding framework agreements with suppliers of mining equipment.
Additionally, we have ensured full access to a major Pacific port which
guarantees exports to Asia Pacific. We intend to continue applying all efforts
to stage-by-stage development of the Elga coal deposit, creating a firm base
for increased production and consolidation of Mechel's position as a leading
coking coal exporter in Asia Pacific."

Steel Segment Results For The Full Year 2012                   
                                                             
US$ thousand                   FY 2012 ^(1)      FY 2011 ^(1)   Change Y-on-Y
Revenue from external          6,803,413         7,154,417      -4.9%
customers
Intersegment sales             267,908           310,416        -13.7%
Operating (loss) / income     (1,364,557)       191,745        --
Net loss attributable to       (1,677,326)       (232,606)      621.1%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)     (227,013)         (232,606)      -2.4%
Adjusted EBITDA ^(1) (3)       290,152           318,875        -9.0%
Adjusted EBITDA, margin ^(4)   4.1%              4.3%           --
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, loss from discontinued operations, impairment
of long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.


                                                           
US$ thousand                 4Q 2012 ^(1)     3Q 2012 ^(1)    Change Q-on-Q
Revenue from external        1,557,055        1,699,564       -8.4%
customers
Intersegment sales           72,752           49,629          46.6%
Operating loss               (861,326)        (42,868)        1909.3%
Net loss attributable to     (925,496)        (110,989)       733.9%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)   (38,824)         (35,740)        8.6%
Adjusted EBITDA ^(1) (3)     75,565           74,747          1.1%
Adjusted EBITDA, margin ^(4) 4.6%             4.3%            --
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, loss from discontinued operations, forex
gain/(loss), net result on the disposal of non-current assets, impairment of
long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

Steel Segment Output and Sales to 3^rd Parties For The Full Year 2012

Production:                                
Product name FY 2012,        FY 2011,        FY 2012 vs.
             thousand tonnes thousand tonnes FY 2011, %
Pig iron     4,161           3,728           12%
Steel        6,532           6,118           7%



Product Sales:                                                   
Product name                       FY 2012,        FY 2011,        FY 2012 vs.
                                   thousand tonnes thousand tonnes FY 2011, %
Flat products                      710             679             5%
Including those produced by third  370             391             -5%
parties
Long products                      3,861           3,821           1%
Including those produced by third  801             818             -2%
parties
Billets                            2,036           2,092           -3%
Including those produced by third  674             1,437           -53%
parties
Hardware and welded mesh           962             961             0%
Including those produced by third  46              52              -12%
parties
Forgings                           55              60              -8%
Stampings                          111             117             -5%

Mechel's steel segment's revenue from external customers in 2012 amounted to
$6.8 billion, or 60% of the consolidated net revenue, a decrease of 5.5% over
the segment's revenue from external customers of $7.2 billion, or 57% of
consolidated revenue, in 2011.

In 2012, the steel segment's operating loss totaled $1.4 billion, or -19.3% of
the segment's revenue, versus an operating income of $191.7 million, or 2.6%
of total segment revenue, in 2011. The adjusted EBITDA in the steel segment in
2012 decreased by 9.0% and amounted to $290.2 million, compared to the
adjusted EBITDA of $318.9 million in 2011. The adjusted EBITDA margin of the
steel segment was 4.1% in 2012, versus an adjusted EBITDA margin of 4.3% in
2011. Depreciation and amortization in the steel segment increased by 34.6%
from $126.0 million in 2011 to $169.6 million in 2012.

Mechel-Steel Management Company OOO's Chief Executive Officer Vladimir Tytsky
noted in commenting on the steel segment's results:

"As a whole, last year for the steel division was characterized by growing
production and sales volumes on practically all counts. Despite a worsening
market situation, this enabled us to minimize the decrease in profit. EBITDA
and net loss also worsened marginally compared to 2011. Our
electrometallurgical assets abroad had the most negative impact on the
segment's results. Their activity was responsible for a significant part of
our write-offs that had such an effect on the final financial results. In
implementing the group's new strategy for optimizing its asset structure, in
the first quarter of this year we sold our Romanian-based steel plants, and
their activities will no longer have a negative influence on the division's
results. At the same time, Russian enterprises showed stable work with high
loads. It is worth noting that along with stable production volumes at our
main plants despite weakening markets we managed to notably reduce inventories
and optimize working capital benefitting from our sales network, which
significantly improved our cash flow. We were successful in controlling
production costs, launched production of new types of high value-added
products, as well as mastered the technology of smelting rail steels and their
out-of-furnace processing as part of preparation for the launch of Chelyabinsk
Metallurgical Plant's universal rolling mill. Once the winter season, when
demand for steel products is traditionally low, was over, we are seeing a
certain stabilization of construction rolls and can forecast its improvement
once the construction activity picks up, which will undoubtedly improve the
division's results."

Ferroalloys Segment Results For The Full Year 2012
                                                            
US$ thousand                  FY 2012 ^(1)    FY 2011 ^(1)    Change Y-on-Y
Revenue from external         416,721         475,254          -12.3%
customers
Intersegment sales            87,411          199,191          56.1%
Operating loss                (259,896)       (44,912)         478.7%
Net loss attributable to      (292,070)       (71,580)         308.0%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)    (185,138)       (71,580)         158.6%
Adjusted EBITDA ^(1) (3)      (48,559)        45,877           --
Adjusted EBITDA, margin       -9.6%           6.8%             --
^(4)^
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for amounts due from related parties, amounts attributable to
noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.


                                                            
US$ thousand                  4Q 2012 ^(1)     3Q 2012 ^(1)    Change Q-on-Q
Revenue from external         68,607           91,008          -24.6%
customers
Intersegment sales            14,432           23,025          -37.3%
Operating loss                (66,304)         (24,525)        170.4%
Net loss attributable to      (87,288)         (41,687)        109.4%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)    (63,354)         (41,687)        52.0%
Adjusted EBITDA ^(1) (2)      (30,538)         (3,143)         871.6%
Adjusted EBITDA, margin       -36.8%           -2.8%           --
^(3)^
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for amounts due from related parties, amounts attributable to
noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

Product Sales:

                                                                
Product name                       FY 2012,        FY 2011,        FY 2012 vs.
                                   thousand tonnes thousand tonnes FY 2011, %
Nickel                             11              16.3            -32%
Including nickel supplied to       2               4.9             -67%
Mechel enterprises
Ferrosilicon                       78              83.8            -6%
Including ferrosilicon supplied to 30              30.3            -2%
Mechel enterprises
Chrome                             70              58.4            20%
Including chrome supplied to       9               13.5            -37%
Mechel enterprises

The ferroalloy segment's revenue from external customers in 2012 amounted to
$416.7 million, or 4% of consolidated net revenue, a decrease of 12.3%
compared with the segment's revenue from external customers of $475.3 million
or 4% of consolidated net revenue, in 2011.

In 2012, the operating loss in the ferroalloys segment decreased by 478.7% and
totaled $259.9 million, or -51.6% of total segment revenue, as compared to an
operating loss of $44.9 million, or-6.7% of total segment revenue, in 2011.
The adjusted EBITDA in the ferroalloys segment in 2012 amounted to negative
$48.6 million, compared to segment's adjusted positive EBITDA of $45.9 million
in 2011. The adjusted EBITDA margin of the ferroalloys segment was -9.6% in
2012 compared to the adjusted EBITDA margin of 6.8% in 2011. The ferroalloys
segment's depreciation, depletion and amortization in 2012 was $89.0 million,
a decrease of 1.1% over $90.0 million in 2011.

Mechel-Ferroalloys Management Company OOO's Chief Executive Officer Sergey
Zhilyakov noted:

"Last year the division has underwent significant changes in its operations.
Due to the continuing weakness of the ferroalloys market we decided to halt
Southern Urals Nickel Plant. The plant was making loss for the group for a
considerable period as production costs were higher than its product's market
price. So the plant's stoppage will have a positive effect on the segment's
results. At the same time, other enterprises continued to work stably. Bratsk
Ferroalloy Plant's products are in high demand and yield stable revenue for
the segment despite a small increase in production costs due to higher power
costs.The chrome business has shown a decrease in production costs by the end
of the year as well as production growth. At the same time early this year we
see a stronger demand for chrome and ferrosilicon from our foreign consumers,
which means an increase in prices and allows us to expect better results.
Also, in the end of 2012 the modernized furnace №4 reached its full capacity
and in the second quarter we started to supply Bratsk Ferroalloy Plant with
its own quartzite from the Uvatsk deposit, which will have its own positive
effect in 2013."

Power Segment Results for The Full Year 2012                   
                                                            
US$ thousand                FY 2012 ^(1)    FY 2011 ^(1)(5)    Change Y-on-Y
Revenue from external       757,239         737,675            2.7%
customers
Intersegment sales          483,873         506,807            -4.5%
Operating income            34,720          32,199             7.8%
Net (loss) / income
attributable to             (103,521)       (5,808)            1682.4%
shareholders of Mechel OAO
Adjusted net income ^(1)    4,908           2,562              91.5%
(2)
Adjusted EBITDA ^(1) (3)    44,597          40,109             11.2%
Adjusted EBITDA, margin^(4) 3.6%            3.2%               --
^(1)^ See Attachment A.
^(2)^ Adjusted net (loss) income is net (loss) income adjusted for effects of
impairment of long-lived assets, loss from discontinued operations and
goodwill and provision for amounts due from related parties (including income
tax and amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, loss from discontinued operations, forex
gain/(loss), net result on the disposal of non-current assets, impairment of
long-lived assets and goodwill, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest
income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.
^(5)^ Adjusted to effect from discontinued operations


                                                            
US$ thousand                4Q 2012 ^(1)    3Q 2012 ^(1)(5)    Change Q-on-Q
Revenue from external       219,788         139,943            57.1%
customers
Intersegment sales          125,511         109,101            15.0%
Operating loss              11,566          (8,153)            --
Net loss attributable to    (41,026)        (13,877)           195.6%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)  2,720           (11,883)           --
Adjusted EBITDA ^(1) (3)    15,441          (5,883)            --
Adjusted EBITDA, margin^(4) 4.5%            -2.3%              --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill, loss from discontinued operations and
provision for amounts due from related parties (including income tax and
amounts attributable to noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
loss from discontinued operations, provision for amounts due from related
parties, amounts attributable to noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.
^(5)^ Adjusted to effect from discontinued operations

Power Segment Output and Sales For The Full Year 2012

                                                      
Product name                         FY 2012   FY 2011   FY 2012 vs. FY
                                                         2011, %
Electric power generation (ths. kWh) 4,272,610 3,915,202 9%
Heat power generation (Gcal)         7,945,674 7,142,197 11%

Mechel's power segment revenue from external customers in 2012 was $757.2
million, or 7% of consolidated net revenue, an increase of 2.6% compared with
the segment's revenue from external customers of $737.7 million or 6% of
consolidated net revenue in 2011.

The operating income in the power segment in 2012 amounted to $34.7 million,
or -2.8% of thesegment's revenue in the same period compared to an operating
income of $32.2 million, or 2.6% of the total segment revenue, in 2011. The
adjusted EBITDA in the power segment in 2012 amounted to negative $44.6
million, compared to the adjusted positive EBITDA of $40.1 million in 2011.
The adjusted EBITDA margin for the power segment in 2012 amounted to 3.6%
compared to 3.2% in 2011. Depreciation and amortization in power segment in
2012 decreased by 10.1% comparing with the 2011 from $11.9 million to $10.7
million.

Mechel-Energo OOO's Chief Executive Officer Yuri Yampolsky noted:

"The segment's final financial results were notably impacted by accounting
losses due to the disposal of our Bulgarian-based Toplofikatsia Rousse power
plant. Apart from that, the power division worked well. We increased
production volumes, revenue, operational profit and EBITDA.Adjusted net
profit, without Toplofikatsia Rousse's write-offs, also came out higher than
the previous year. We continue a stage-by-stage modernization of the
division's production assets in order to maintain our ability to offer our
consumers uninterrupted supplies of electricity and heat."

Recent Highlights

  *In December 2012, Mechel announced the disposal of 100% of the shares of
    Toplofikatsia Rousse EAD (TPP Rousse, Bulgaria). The disposal is valued at
    approximately 24.8 million dollars.
    
  *In December 2012, Mechel reported halting production at Southern Urals
    Nickel Plant OAOconsidering persistent negative trends on global nickel
    market and unfavorable forecasts for its recovery in the foreseeable
    future, in order to minimize the plant's losses.
    
  *In January 2013, Mechel reported acquiring 55% (73.33% of common shares)
    of Vanino Sea Trade Port OAO. Later Mechel reported selling a part of its
    earlier acquired controlling stake in Vanino Sea Trade Port OAO to Russian
    and foreign investors, retaining some 1.5% of the enterprise's common
    shares. In January Mechel reported that Mecheltrans OOO acquired 21.64% of
    Vanino Sea Trade Port OAO's common shares from one of the port's minor
    shareholders – a subsidiary of the company En+.
    
  *In January 2013, Mechel reported the resumption of work at several of
    Mechel Bluestone's mining facilities due to decreased coal inventories.
    The complexes are due to produce some 135,000 tonnes a month.
    
  *In February 2013, Mechel reported that it has disposed of its Romanian
    steel assets - Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste
    S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A - to a
    privately held Romanian group, Romania's Invest Nikarom SRL. The
    transaction terms will result in Mechel receiving a nominal contribution.
    
  *In March 2013, Mechel announced that its subsidiary Mechel Carbon
    (Singapore) Pte. Ltd. has signed a memorandum for supplies of coking coal
    with Baosteel Resources Int. Co. Ltd. According to the memorandum Mechel
    Carbon is due to directly supply Baosteel with 960,000 tonnes of coking
    coal annually.
    
  *In March 2013, Mechel announced its decision to make an early redemption
    of its 05 series bonds, placed on October 20, 2009, as well as to pay the
    accumulated coupon interest for the 14 coupon period.
    
  *In April 2013, Mechel announced reaching an agreement with an
    international syndicate of lender banks on getting approval for waivers
    and amendments to certain major credit facilities.
    
  *In April Mechel announced signing an agreement with VTB Bank for a
    40-billion-ruble (approximately 1.3-billion-dollar*) loan.

Financial Position

Capital expenditure on property, plant and equipment and acquisition of
mineral licenses for the FY2012 amounted to $1,028.8 million, of which $612.2
million was invested in the mining segment, $360.6 million was invested in the
steel segment, $46.3 million was invested in the ferroalloy segment and $9.7
million was invested in the power segment.

As of December 31, 2012, total debt was $9.4 billion. Cash and cash
equivalents amounted to $295 million and net debt amounted to $9.1 billion
(net debt is defined as total debt outstanding less cash and cash equivalents)
at end of 4Q 2012.

The management of Mechel will host a conference call today at 10:00 a.m. New
York time (3:00 p.m. London time, 6:00 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 is one of the leading Russian companies. Its business includes four
segments: mining, steel, ferroalloy and power. Mechel unites producers of
coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware,
heat and electric power. 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.

              Attachments to the FY 2012 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.

Adjusted EBITDA represents earnings before Depreciation, depletion and
amortization, Foreign exchange gain/(loss), Loss from discontinued operations,
Gain/(loss) from remeasurement of contingent liabilities at fair value,
Interest expense, Interest income, Net result on the disposal of non-current
assets, Impairment of long-lived assets and goodwill, Provision for amounts
due from related parties, Amount attributable to noncontrolling interests and
Income taxes. Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of our net revenues. Our adjusted EBITDA may not be similar to
EBITDA measures of other companies. Adjusted EBITDA 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 our
adjusted 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 adjusted
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.

Adjusted net income / (loss) represents net income / (loss) before Loss from
discontinued operations, Impairment of long-lived assets and goodwill and
Provision for the amounts due from related parties, including the effect on
income tax and amounts attributable to noncontrolling interests. Our adjusted
net income / (loss) may not be similar to adjusted net income / (loss)
measures of other companies. Adjusted net income / (loss) 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 our
adjusted net income / (loss) provides useful information to investors because
it is an indicator of the strength and performance of our ongoing business
operations. While impairment of long-lived assets and goodwill and provision
for the amounts due from related parties are considered operating costs under
generally accepted accounting principles, these expenses represent the
non-cash current period allocation of costs associated with assets acquired or
constructed in prior periods. Our adjusted net income / (loss) calculation is
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.

Adjusted EBITDA can be reconciled to our consolidated statements of operations
as follows:

Consolidated results

                                                                   
US$ thousand                                             FY 2012     FY 2011
Net (loss) / income                                      (1,664,568) 727,885
Add:
Depreciation, depletion and amortization                 586,218     556,357
Forex loss / (gain)                                      (88,711)    117,076
Loss from remeasurement of contingent liabilities at     1,906       1,760
fair value
Interest expense                                         669,353     560,548
Interest income                                          (70,509)    (16,786)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and         1,611,099   5,151
provision for amounts due from related parties
Loss from discontinued operation, net of income tax      108,429     8,370
Amount attributable to non-controlling interests         (317)       75,562
Income taxes                                             179,155     360,750
Adjusted EBITDA                                          1,332,055   2,396,673

                                                                   
                                                                   
US$ thousand                                             4Q 2012     3Q 2012
Net (loss) / income                                      (1,114,473) 54,910
Add:
Depreciation, depletion and amortization                 135,805     139,605
Forex loss / (gain)                                      (82,884)    (126,630)
Loss from remeasurement of contingent liabilities at     493         484
fair value
Interest expense                                         184,880     159,529
Interest income                                          (18,056)    (15,883)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and         916,462     74,500
provision for amounts due from related parties
Loss from discontinued operation, net of income tax      43,746      1,993
Amount attributable to noncontrolling interests          (7,376)     17,730
Income taxes                                             41,792      69,388
Adjusted EBITDA                                          100,389     375,626

Adjusted Net income / (loss) can be reconciled as follows:

                                                                     
US$ thousand                                               FY 2012     FY 2011
Net (loss) / income                                        (1,664,567) 727,885
Impairment of long-lived assets and goodwill and provision 1,627,004   --
for amounts due from related parties
Amount attributable to noncontrolling interests            (27,778)    --
Income taxes                                               (20,043)    --
Loss from discontinued operation, net of income tax        108,429     8,370
Adjusted net income                                        23,044      736,255

                                                                     
                                                                     
US$ thousand                                               4Q 2012     3Q 2012
Net(loss) / income                                        (1,114,473) 54,911
Impairment of long-lived assets and goodwill and provision 909,868     77,222
for amounts due from related parties
Loss from discontinued operation, net of income tax        43,746      1,993
Adjusted net (loss) / income                               (160,860)   134,126

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

                                 
US$ thousand            FY 2012    FY 2011
Revenue, net            11,274,933 12,541,145
Adjusted EBITDA         1,332,055  2,396,673
Adjusted EBITDA, margin 11.81%     19.11%

                                
                                
US$ thousand            4Q 2012   3Q 2012
Revenue, net            2,521,449 2,711,398
Adjusted EBITDA         100,389   375,627
Adjusted EBITDA, margin 3.98%     13.85%

Mining Segment

                                                                   
US$ thousand                                               FY 2012   FY 2011
Net income                                                 360,770   1,069,892
Add:
Depreciation, depletion and amortization                   317,005   328,521
Forex loss / (gain)                                        (65,795)  60,718
Loss from remeasurement of contingent liabilities at fair  1,906     1,760
value
Interest expense                                           280,787   310,318
Interest income                                            (101,495) (138,960)
Net result on the disposal of non-current assets           5,636     8,609
Amount attributable to noncontrolling interests            45,976    80,050
Income taxes                                               153,495   302,919
Adjusted EBITDA                                            998,285   2,023,827

                                                                    
                                                                    
US$ thousand                                                 4Q 2012  3Q 2012
Net income                                                   (67,475) 216,765
Add:
Depreciation, depletion and amortization                     73,994   76,515
Forex loss / (gain)                                          (67,635) (93,695)
Loss from remeasurement of contingent liabilities at fair    493      484
value
Interest expense                                             75,358   64,605
Interest income                                              (17,478) (29,389)
Net result on the disposal of non-current assets             6,441    (2,388)
Amount attributable to noncontrolling interests              7,402    10,394
Income taxes                                                 22,008   61,866
Adjusted EBITDA                                              33,108   305,157

Adjusted Net income/loss can be reconciled as follows:

                                                     
US$ thousand                                   FY 2012 FY 2011
Net income                                     360,770 1,069,892
Provision for amounts due from related parties 22,668  --
Adjusted net income                            383,438 1,069,892

                                                      
                                                      
US$ thousand                                   4Q 2012  3Q 2012
Net (loss) / income                            (67,475) 216,765
Provision for amounts due from related parties (11)     1,974
Adjusted net (loss) / income                   (67,486) 218,739

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

                                               
US$ thousand                           FY 2012   FY 2011
Revenue (including intersegment sales) 4,015,055 5,192,028
Adjusted EBITDA                        998,285   2,023,827
Adjusted EBITDA, margin                24,86%    38.98%

                                             
                                             
US$ thousand                           4Q 2012 3Q 2012
Revenue (including intersegment sales) 819,282 949,168
Adjusted EBITDA                        33,108  305,156
Adjusted EBITDA, margin                4.04%   32.15%

Steel Segment

                                                                   
US$ thousand                                             FY 2012     FY 2011
Net loss                                                 (1,677,326) (232,606)
Add:
Depreciation, depletion and amortization                 169,582     125,987
Forex loss                                               (46,071)    80,739
Interest expense                                         383,184     318,956
Interest income                                          (21,927)    (13,377)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and         1,482,809   271
provision for amounts due from related parties
Amount attributable to noncontrolling interests          (25,350)    (9,708)
Income taxes                                             25,251      48,613
Adjusted EBITDA                                          290,152     318,875

                                                                   
                                                                   
US$ thousand                                               4Q 2012   3Q 2012
Net loss                                                   (925,496) (110,989)
Add:
Depreciation, depletion and amortization                   44,925    39,762
Forex loss / (gain)                                        (22,973)  (48,171)
Interest expense                                           105,030   96,128
Interest income                                            (16,197)  155
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and provision 887,103   76,726
for amounts due from related parties
Amount attributable to noncontrolling interests            (11,129)  8,470
Income taxes                                               14,301    12,666
Adjusted EBITDA                                            75,564    74,747

Adjusted Net income / (loss) can be reconciled as follows:

                                                                   
US$ thousand                                             FY 2012     FY 2011
Net loss                                                 (1,677,326) (232,606)
Impairment of long-lived assets and goodwill and         1,480,430   --
provision for amounts due from related parties
Amount attributable to noncontrolling interests          (15,320)    --
Income taxes                                             (14,797)    --
Adjusted net loss                                        (227,013)   (232,606)

                                                                   
                                                                   
US$ thousand                                               4Q 2012   3Q 2012
Net loss                                                   (925,496) (110,989)
Impairment of long-lived assets and goodwill and provision 886,672   75,249
for amounts due from related parties
Adjusted net loss                                          (38,824)  (35,740)

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

                                               
US$ thousand                           FY 2012   FY 2011
Revenue (including intersegment sales) 7,071,321 7,464,833
Adjusted EBITDA                        290,152   318,875
Adjusted EBITDA, margin                4.10%     4.27%

                                               
                                               
US$ thousand                           4Q 2012   3Q 2012
Revenue (including intersegment sales) 1,629,807 1,749,193
Adjusted EBITDA                        75,565    74,747
Adjusted EBITDA, margin                4.64%     4.27%

Ferroalloys Segment

                                                                    
US$ thousand                                                FY 2012   FY 2011
Net loss                                                    (292,070) (71,580)
Add:
Depreciation, depletion and amortization                    88,969    89,986
Forex loss / (gain)                                         23,153    (24,211)
Interest expense                                            34,018    51,568
Interest income                                             (59)      (2,117)
Net result on the disposal of non-current assets,           124,107   1,174
impairment of long-lived assets and goodwill
Amount attributable to noncontrolling interests             (23,828)  (690)
Income taxes                                                (2,849)   1,747
Adjusted EBITDA                                             (48,559)  45,877

                                                                    
                                                                    
US$ thousand                                                 4Q 2012  3Q 2012
Net loss                                                     (87,288) (41,687)
Add:
Depreciation, depletion and amortization                     14,194   20,856
Forex (gain) / loss                                          7,711    15,236
Interest expense                                             11,836   6,729
Interest income                                              (3)      253
Net result on the disposal of non-current assets, impairment 22,915   142
of long-lived assets and goodwill
Amount attributable to noncontrolling interests              (4,668)  (1,032)
Income taxes                                                 4,765    (3,640)
Adjusted EBITDA                                              (30,538) (3,143)

Adjusted Net income/loss can be reconciled as follows:

                                                        
US$ thousand                                    FY 2012   FY 2011
Net loss                                        (292,070) (71,580)
Impairment of long-lived assets and goodwill    123,906   --
Amount attributable to noncontrolling interests (12,458)  --
Income taxes                                    (4,516)   --
Adjusted net loss                               (185,138) (71,580)

                                                     
                                                     
US$ thousand                                  4Q 2012  3Q 2012
Net loss                                      (87,288) (41,687)
Impairment of long-lived assets and goodwill 23,205   --
Income taxes                                  729      --
Adjusted net loss                             (63,354) (41,687)

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

                                              
US$ thousand                           FY 2012  FY 2011
Revenue (including intersegment sales) 504,133  674,445
Adjusted EBITDA                        (48,559) 45,877
Adjusted EBITDA, margin                -9.63%   6.80%

                                              
US$ thousand                           4Q 2012  3Q 2012
Revenue (including intersegment sales) 83,038   114,033
Adjusted EBITDA                        (30,538) (3,143)
Adjusted EBITDA, margin                -36.77%  -2.76%

Power Segment

                                                                     
US$ thousand                                                 FY 2012   FY 2011
Net loss                                                     (103,521) (5,808)
Add:
Depreciation, depletion and amortization                     10,662    11,863
Forex (gain) / loss                                          1         (169)
Interest expense                                             24,372    17,580
Interest income                                              (38)      (205)
Net result on the disposal of non-current assets, impairment (1,452)   (4,903)
of long-lived assets and goodwill
Loss from discontinued operation, net of income tax          108,429   8,370
Amount attributable to noncontrolling interests              2,885     5,910
Income taxes                                                 3,258     7,471
Adjusted EBITDA                                              44,597    40,109

                                                                    
                                                                    
US$ thousand                                                 4Q 2012  3Q 2012
Net loss                                                     (41,026) (13,877)
Add:
Depreciation, depletion and amortization                     2,691    2,471
Forex loss / (gain)                                          12       1
Interest expense                                             8,299    5,166
Interest income                                              (21)     (1)
Net result on the disposal of non-current assets, impairment 3        19
of long-lived assets and goodwill
Loss from discontinued operation, net of income tax          43,746   1,993
Amount attributable to noncontrolling interests              1,019    (102)
Income taxes                                                 718      (1,503)
Adjusted EBITDA                                              15,441   (5,833)

Adjusted Net income/loss can be reconciled as follows:

                                                            
US$ thousand                                        FY 2012   FY 2011
Net loss                                            (103,521) (5,808)
Loss from discontinued operation, net of income tax 108,429   8,370
Adjusted net income                                 4,908     2,562

                                                           
                                                           
US$ thousand                                        4Q 2012  3Q 2012
Net loss                                            (41,026) (13,877)
Impairment of goodwill                              --       --
Income taxes                                        --       --
Loss from discontinued operation, net of income tax 43,746   1,994
Adjusted net (loss) / income                        2,720    (11,883)

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

                                               
US$ thousand                           FY 2012   FY 2011
Revenue (including intersegment sales) 1,241,112 1,244,482
Adjusted EBITDA                        44,597    40,109
Adjusted EBITDA, margin                3.59%     3.22%

                                             
                                             
US$ thousand                           4Q 2012 3Q 2012
Revenue (including intersegment sales) 345,299 249,044
Adjusted EBITDA                        15,441  (5,833)
Adjusted EBITDA, margin                4.47%   -2.348%

                                                                
                                                                
Consolidated Balance Sheets                                      
(in thousands of U.S. dollars)                                   
                                                    December 31 December 31
                                                     2012         2011
                                                                
ASSETS                                                           
                                                                
Cash and cash equivalents                            $ 294,958    $ 642,648
Accounts receivable, net of allowance for doubtful   705,462      816,446
accounts  of $84,367 in 2012 and $46,062 in 2011
Due from related parties, net of allowance of        451,377      1,315,288
$919,113 in 2012
Inventories                                          2,073,189    2,592,896
Deferred income taxes                                31,629       35,719
Current assets of discontinued operations            59,223       16,209
Prepayments and other current assets                 561,789      653,461
Total current assets                                 4,177,627    6,072,667
                                                                
Long-term investments in related parties             7,853        8,150
Other long-term investments                          14,671       13,997
Property, plant and equipment, net                   7,798,839    7,049,625
Mineral licenses, net                                4,658,657    4,733,676
Other non-current assets                             183,566      203,745
Deferred income taxes                                55,243       27,817
Goodwill                                             798,847      1,049,514
Non-current assets of discontinued operations        --          150,608
                                                                
Total assets                                         $ 17,695,303 $ 19,309,799
                                                                
LIABILITIES AND EQUITY                                           
                                                                
Short-term borrowings and current portion of         $ 1,460,750  $ 2,651,357
long-term debt
Accounts payable and accrued expenses:                           
Trade payable to vendors of goods and services       1,053,344    972,920
Advances received                                    154,881      205,994
Accrued expenses and other current liabilities       337,433      280,935
Taxes and social charges payable                     314,283      276,580
Unrecognized income tax benefits                     20,202       2,190
Due to related parties                               199,097      179,672
Asset retirement obligation, current portion         5,023        3,648
Deferred income taxes                                38,485       41,822
Current liabilities of discontinued operations       17,801       5,183
Pension obligations, current portion                 20,044       22,005
Dividends payable                                    3,086        4
Finance lease liabilities, current portion           132,090      96,907
                                                                
Total current liabilities                            3,756,519    $ 4,739,217
                                                                
Long-term debt, net of current portion               7,929,489    6,732,029
Asset retirement obligations, net of current portion 44,831       39,593
Pension obligations, net of current portion          177,218      143,673
Deferred income taxes                                1,499,990    1,514,864
Finance lease liabilities, net of current portion    347,768      375,249
Due to related parties                               16,862       --
Long-term liabilities of discontinued operations     --          17,337
Other long-term liabilities                          382,969      382,511
                                                                
EQUITY                                                           
Common shares (10 Russian rubles par value;
497,969,086 shares authorized, 416,270,745 shares    133,507      133,507
issued and outstanding
as of December 31, 2012 and 2011)
Preferred shares (10 Russian rubles par value;
138,756,915 shares authorized, 83,254,149 shares     25,314       25,314
issued and outstanding
as of December 31, 2012 and 2011)
Additional paid-in capital                           845,215      845,994
Accumulated other comprehensive loss                 (326,933)    (356,580)
Retained earnings                                    2,500,278    4,345,754
Equity attributable to shareholders of Mechel OAO    3,177,381    4,993,989
Noncontrolling interests                             362,276      371,337
Total equity                                         3,539,657    5,365,326
                                                                
Total liabilities and equity                         $ 17,695,303 $ 19,309,799

                                                                
                                                                
Consolidated Statements of Income and Comprehensive              
Income (Loss)
(in thousands of U.S. dollars)                      
                                                   Year ended December 31,
                                                   2012          2011
Revenue, net (including related party amounts of
$759,577 and$904,876 during 2012 and 2011,         $ 11,274,933  $ 12,541,145
respectively)
Cost of goods sold (including related party amounts
of $844,214 and $1,612,001 during 2012 and 2011,    (8,024,210)   (8,236,807)
respectively)
Gross profit                                        3,250,723     4,304,338
                                                                
Selling, distribution and operating expenses:                    
Selling and distribution expenses                   (1,761,961)   (1,736,265)
                                                                
Taxes other than income tax                         (127,147)     (102,788)
                                                                
Accretion expense                                   (5,021)       (6,659)
Loss on write-off of property, plant and equipment  (11,429)      (11,006)
Impairment of goodwill and long-lived assets        (707,891)     --
Provision for amounts due from related parties      (919,113)     --
Provision (recovery of provision) for doubtful      (28,344)      1,331
accounts
General, administrative and other operating         (587,692)     (608,847)
expenses, net
Total selling, distribution and operating expenses  (4,148,598)   (2,464,234)
Operating (loss) income                            (897,875)     1,840,104
                                                                
Other income and (expense):                                      
Incomefrom equity investments                      475           304
Interest income                                     70,509        16,785
Interest expense                                    (669,353)     (560,548)
Foreign exchange gain (loss)                        88,711        (117,076)
Other income (expenses), net                        30,232        (7,002)
Total other income and (expense), net               (479,426)     (667,537)
(Loss) income from continuing operations, before    (1,377,301)   1,172,567
income tax and discontinued operations
                                                                
Income tax expense                                  (179,155)     (360,750)
(Loss) income from continuing operations            (1,556,456)   811,817
                                                                
Net loss from discontinued operations, net of       (108,429)     (8,370)
income tax
Net (loss) income                                   (1,664,885)   803,447
Less: Net loss (income) attributable to             317           (75,562)
noncontrolling interests
Net (loss) income attributable to shareholders of   $ (1,664,568) $ 727,885
MechelOAO
Less: Dividends on preferred shares                 (79,056)      (78,281)
Net (loss) income attributable to common            (1,743,624)   649,604
shareholders of MechelOAO
                                                                
Net (loss) income                                   (1,664,885)   803,447
Currency translation adjustment                     70,893        (170,794)
Change in pension benefit obligation                (17,778)      (7,160)
Adjustment of available-for-sale securities         (300)         (2,245)
Comprehensive (loss) income                         $ (1,612,070) $ 623,248
Comprehensive income attributable to noncontrolling (22,851)      (50,527)
interests
Comprehensive (loss) income attributable to         (1,634,921)   572,721
shareholders of MechelOAO

                                                                 
                                                    
Consolidated Statements of Cash Flows                
(in thousands of U.S. dollars)                       
                                                    Year ended December 31,
                                                    2012          2011
Cash Flows from Operating Activities                              
Net (loss) income from continuing operations         (1,556,139)   736,255
attributable to shareholders ofMechelOAO
Net loss (income) from continuing operations         (317)         75,562
attributable to non-controlling interests
Net (loss) income from continuing operations         $ (1,556,456) $ 811,817
Adjustments to reconcile net (loss) income from
continuing operations to net cash provided by                     
operating activities:
Depreciation                                         438,661       372,558
Depletion and amortization                           147,557       183,799
Foreign exchange (gain) loss                         (88,711)      117,076
Deferred income taxes                                (66,035)      7,782
Provision (recovery of provision) for doubtful       28,344        (1,331)
accounts
Change in inventory reserves                         41,035        18,276
Accretion expense                                    5,021         6,659
Change in asset retirement obligations               (4,998)       (6,823)
Loss on write-off of property, plant and equipment   11,429        11,006
Impairment of goodwill and long-lived assets         707,891       --
Provision for amounts due from related parties       919,113       --
Income from equity investments                       (475)         (304)
Non-cash interest on pension liabilities             12,159        13,583
Gain on sale of property, plant and equipment        (7,477)       (7,422)
Gain on accounts payable with expired legal term     (4,057)       (5,390)
Gain on forgiveness of fines and penalties           (2,777)       (47)
Amortization of loan origination fee                 54,718        53,352
Loss resulting from accretion and remeasurement of   1,906         1,760
contingent obligation
Pension benefit plan curtailment gain                (1,691)       (38,711)
Pension service cost, amortization of prior service  4,725         5,165
cost and actuarial (gain) loss, other expenses
Changes in working capital items, net of effects                  
from acquisition of new subsidiaries:
Accounts receivable                                  66,310        (318,039)
Inventories                                          634,527       (763,371)
Trade payable to vendors of goods and services       72,954        257,599
Advances received                                    (56,418)      (145,604)
Accrued taxes and other liabilities                  59,416        13,938
Settlements with related parties                     (241,908)     390,940
Other current assets                                 99,748        (80,961)
Net operation cash flows of discontinued operations  (6,737)       (12,484)
Dividends received                                   25,956        --
Unrecognized income tax losses (benefits)            17,598        (2,285)
Net cash provided by operating activities            1,311,328     882,538
                                                                 
Cash Flows from Investing Activities                              
Acquisition of DEMP, less cash acquired              (32,810)      (70,044)
Acquisition of Cognor, less cash acquired            (24,172)      --
Acquisition of Lomprom Rostov, less cash acquired    (24)          --
Advance payment received in association with sale of 2,640         --
TPP Rousse shares
Acquisition of other subsidiaries, less cash         --            (5,643)
acquired
Capital contribution in affiliates                   --            (571)
Proceeds from disposal of investments in affiliates  2,998         6
Short-term loans issued and other investments
(including related party amounts of $nil in 2012 and (4,451)       (1,089,850)
$944,530 in 2011)
Proceeds from short-term loans issued                217,810       353,624
Proceeds from disposals of property, plant and       23,498        20,469
equipment
Prepayment for the participation in auction          --            (7,869)
Purchases of mineral licenses                        (6,079)       (23,088)
Cash flows from discontinued operations              4,174         8,642
Purchases of property, plant and equipment           (1,022,721)   (1,803,908)
Net cash used in investing activities                (839,137)     (2,618,232)
                                                                 
Cash Flows from Financing Activities                              
Proceeds from borrowings                             3,977,809     5,938,730
Repayment of borrowings                              (4,405,881)   (3,583,229)
Dividends paid                                       (186,443)     (210,233)
Dividends paid to noncontrolling interest            (29,054)      --
Acquisition of noncontrolling interest in            (632)         (283)
subsidiaries
Repayment of obligations under finance lease         (149,471)     (99,372)
Cash flows from discontinued operations              (1,477)       (1,628)
Sale leaseback proceeds                              3,143         35,049
Net cash (used in) provided by financing activities  (792,006)     2,079,034
                                                                 
Effect of exchange rate changes on cash and cash     (27,875)      (41,117)
equivalents
                                                                 
Net (decrease) increase in cash and cash equivalents (347,690)     302,223
                                                                 
Cash and cash equivalents at beginning of period     642,648       340,425
Cash and cash equivalents at end of period           $ 294,958     $ 642,648

CONTACT: Mechel OAO
         Vladislav Zlenko
         Director of Investor Relations
         Mechel OAO
         Phone: 7-495-221-88-88
         Fax: 7-495-221-88-00
         vladislav.zlenko@mechel.com

Mechel OAO Logo
 
Press spacebar to pause and continue. Press esc to stop.