ArcelorMittal (MT)

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Sources and Uses of Cash

The following table presents a summary of cash flow of ArcelorMittal:

Net Cash Provided by Operating Activities

For the year ended December 31, 2008, cash flow from operations decreased to $14,652 million, as compared with $16,532 million for the year ended December 31, 2007. The decrease was due in part to the $1.4 billion decrease in net income. Working capital (consisting of inventories plus trade accounts receivables less trade accounts payables) increased by $8.1 billion primarily as a result of an increase in inventories ($7.7 billion), itself due to the increase in price and quantity of raw materials as well as finished steel products. In the fourth quarter of 2008, the Company’s working capital decreased substantially due to a reduction in inventory and accounts receivable, partly offset by accounts payable reduction, as steel and raw material prices collapsed and the Company curtailed its steel production and raw material purchases. The Company expects further inventory reductions in 2009. Cash flow from operations in 2008 included proceeds from the winding up of certain forward exchange and option contracts that had been used to hedge raw material purchases ($2.5 billion).

Net Cash Used in Investing Activities

Net cash used in investing activities was $12,428 million, primarily due to the acquisition of net assets of subsidiaries, net of cash and capital expenditures. In 2008, the Company made a variety of acquisitions for a total investment net of cash acquired of 9.3 billion and received $2.2 billion in proceeds from asset disposals.

Capital expenditures were approximately $5.5 billion in both 2007 and 2008.

Capital expenditure in 2008 included the following principal projects. The Company completed 2 additional direct reduction kiln in Vanderbijlpark, South Africa; an iron ore project with a capacity of two million metric tonnes in Mexico; a new rolling mill in Huta Warszawa, Poland, with a capacity of 650,000 tonnes; a new bar mill with a capacity of 400,000 tonnes in Temirtau, Kazakhstan; a new steel service center in Krakow, Poland, with a capacity of 450,000 tonnes; new coke batteries of 734,000 tonnes in ZKZ, Poland; and the restart of a one million tonne integrated route in Zenica, Bosnia and Herzegovina. The Company also completed its caster revamping in Dunkerque, France and Fos, France, and generated an addition 300,000 tonnes of capacity in Acindar, Argentina.

ArcelorMittal is adapting its previously announced growth plan in light of the current challenging market conditions. Consequently, it is reducing anticipated capital expenditure. It currently expects capital expenditure in 2009 to amount to approximately $3.0 billion. Of this amount, approximately $2.5 billion relates to maintenance of existing sites (including health and safety investments). This level of so-called “maintenance” capital expenditure is lower than in 2007, due in part to reduced production levels as well as to anticipated deflation in engineering and equipment cost. So-called “growth” capital expenditure will be limited to relatively small projects that do not add steel or raw material production capacity and are expected to generate a high return on investment.

For a summary of ArcelorMittal’s principal investments and acquisitions in 2008, including purchase prices paid, see “Item 4A—Information on the Company—History—Investments and Acquisitions”.

Net Cash Used in Financing Activities

Net cash used in financing activities was $2,132 million for the year ended December 31, 2008, as compared to net cash used in financing activities of $3,417 million in 2007. In 2008, the Company repurchased shares for a total consideration of $4.4 billion and paid dividends totaling $2.6 billion, including dividends paid by operating subsidiaries to minority shareholders ($2.1 billion of dividends was paid by the parent company (ArcelorMittal) to its shareholders). The impact of these payments was partially offset by a net increase in indebtedness.

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Equity

Equity attributable to the equity holders of the parent decreased to $55,198 million at December 31, 2008, as compared to $56,685 million at December 31, 2007. The decrease is primarily on account of the share buy back program, dividend pay-outs and foreign exchange impact.

Six months ended June 30, 2008 Compared to Six months ended June 30, 2007

Sources and Uses of Cash

The following table summarizes cash flows of ArcelorMittal for the six months ended June 30, 2008 and 2007:

Net Cash Provided by Operating Activities

For the six months ended June 30, 2008 cash flow from operations decreased to $6,214 million as compared with $6,382 million for the six months ended June 30, 2007, primarily due to higher net income generated from acquired companies, which was partially offset by an increase in working capital needs.

Net Cash Used in Investing Activities

Net cash used in investing activities was $7,983 million, primarily due to the acquisition of net assets of subsidiaries, net of cash and capital expenditures. Capital expenditures in the six months ended June 30, 2008 remained flat at $2,328 million as compared to $2,318 million for the six months ended June 30, 2007. ArcelorMittal’s major 2007 capital expenditure projects, included: a new coke oven battery at ZKZ Poland; hot strip mill expansion at ArcelorMittal Brasil; various improvements, including coke oven battery and sinter plant upgrades, at ArcelorMittal Kryviy Rih; two new direct reduction kilns at ArcelorMittal South Africa; a new integrated steel mill complex consisting of coke oven battery, blast furnace, basic oxygen furnace, power plant and auxiliary facilities in Bosnia; ArcelorMittal Vega’s expansion plan, and a new steel service center in Krakow, Poland.

The Company expects its capital expenditures to increase in 2008 to approximately $7.0 billion.

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ArcelorMittal’s major capital expenditure projects in 2008 include, among others: restart of blast furnace number six at Liege (Belgium) with a capacity of 1.2 metric tonnes, leading to a 2.7 metric tonne capacity for the plant; Acindar (Argentina) steel capacity increase of 300,000 tonnes : revamping of mill in Rodange (Luxembourg), adding 150,000 tonnes of sheet piles capacity; revamping of electrical arc furnace and adding 160,000 tonnes of capacity at Differdange (Luxembourg); restart of 1 metric tonne integrated route in Zenica (Bosnia); two additional direct reduction kilns and de-bottlenecking adding 350,000 tonnes of capacity in Vanderbijlpark (South Africa); iron ore project of 2 metric tonnes (Mexico); new rolling mill of 650,000 tonnes of capacity at Huta Warszawa (Poland); new galvanising line of 310,000 tonnes of capacity at Piombino (Italy); new bar mill of 400,000 tonnes of capacity at Temirtau (Kazakhstan); new steel service centre of 450,000 tonnes of capacity at Krakow (Poland); continuous caster revamping at Dunkerque (France); continuous caster revamping at Fos (France); and new coke batteries of 734,000 tonnes at ZKZ (Poland).

See below “Capital Expenditure and Investments”.

Furthermore, ArcelorMittal plans to continue to invest in mining assets in, among others, Liberia, Senegal, Ukraine, Bosnia, Kazakhstan and Canada.

In connection with the acquisition of certain of its operating subsidiaries, ArcelorMittal has made significant capital expenditure commitments and other commitments with various governmental bodies relating to the next few years. As of December 31, 2007, ArcelorMittal and its subsidiaries had capital commitments outstanding of $1.9 billion under privatization and other major contracts.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $1,513 million for the six months ended June 30, 2008, as compared to net cash provided in financing activities of $1,016 million for the six months ended June 30, 2007.

Shareholders’ Equity

Shareholders’ equity (excluding minority interest) increased to $67,149 million at June 30, 2008, compared with $61,535 million at June 30, 2007.

C. Research and Development, Patents and Licenses

Costs relating to research and development, patents and licenses were not significant as a percentage of sales. Research and development costs expensed in full year 2007 amounted to $214 million and $166 million for the six months ended June 30, 2008.

D. Trend Information