EX-99.2 4 dex992.htm PRESS RELEASE DATED JANUARY 31, 2003 Press Release dated January 31, 2003
 
EXHIBIT 99.2
 
[LOGO] AK Steel
 
News Release
 
Contacts:    Media - Alan H. McCoy, Vice President, Public Affairs (513) 425-2826
                    Investors - James L. Wainscott, Senior Vice President & CFO (513) 425-5392
 
AK STEEL REPORTS FOURTH QUARTER AND FULL YEAR 2002 RESULTS
 
MIDDLETOWN, OH, January 31, 2003 — AK Steel (NYSE: AKS) today reported a net loss of $489.7 million, or $4.54 per diluted share of common stock, for the fourth quarter of 2002. Revenues for the quarter were $1,062.2 million on shipments of 1,428,100 tons. The company’s average selling price rose to $718 per ton from $651 per ton in the year-ago quarter. Excluding unusual items, operating profit for the quarter was $36.9 million, or $26 per ton shipped.
 
The quarterly net loss included two unusual items. The most significant was a non-cash, after-tax charge of $483.8 million, or $4.49 per diluted share, related to recognition of actuarial net losses associated with the company’s pension and retiree benefit plans, resulting from the combined effects of continued negative performance in equity markets, lower interest rates and increasing health care costs. The company said the non-cash pension and health care charge was expected and in line with previously announced estimates.
 
The second unusual item was an after-tax write-down of $6.5 million, or $0.06 per diluted share, related to the company’s equity investment in EVTAC, a taconite iron ore mining and processing facility in Minnesota. The write-down was a result of the company’s decision to purchase most of its iron ore requirements from suppliers other than EVTAC, as well as EVTAC’s loss of other major customers.
 
For the full year 2002, AK Steel reported a net loss of $502.4 million or $4.67 per diluted share of common stock. Annual revenues were $4,289.0 million on steel shipments of 5,803,700 tons. AK Steel’s average selling price for the year was $703 per ton, up from $655 per ton in 2001. Including the benefit of a second quarter insurance settlement of $23.9 million, operating profit was $129.3 million, or $22 per shipped ton. Excluding all unusual items for the year, operating profit was $105.4 million, or $18 per shipped ton. The company ended the year with $282.5 million in cash, up from $101.0 million at the end of 2001.
 
“The employees of AK Steel put forth another outstanding operating performance in 2002,” said Richard M. Wardrop, Jr., chairman and CEO of AK Steel. “Unfortunately, their efforts were overshadowed by the unusual non-cash accounting charges which pushed our net results significantly into the red,” he said.
 
Safety, Quality and Productivity Records Continue
 
AK Steel said it continued to improve on its industry-leading safety, quality and productivity measures during 2002. Of note in safety performance, AK Steel’s total recordable injury rate improved by nearly 35% to 0.77, or about 8 times better than the steel industry average, according to the most recent data available. In 2002, AK Steel’s Rockport (IN) Works, became the second steel plant to earn the Occupational Safety and Health Administration’s Star designation for Voluntary Protection Programs. AK Steel’s Butler (PA) Works became the first steel plant to earn the VPP Star designation in 2001. Virtually every AK Steel operation turned in significantly improved safety performances.
 
AK Steel continued to earn prestigious quality awards from customers in 2002, including Ford, Toyota, and Subaru-Isuzu. During 2002, AK Steel employees also continued to establish new world records in productivity, including continuous casting in both stainless and carbon grades.
 
AK Steel produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. AK Steel is headquartered in Middletown, Ohio. Additional information about AK Steel is available on the company’s web site at www.aksteel.com.
 
-more-

AK Steel Statement of Operations
 
(Dollars and Shares in Millions, Except Per Share Data)
 
    
Three Months Ended December 31,
     
Twelve Months Ended December 31,
  
    
2002
     
2001
     
2002
     
2001
  
Shipments (000 tons)
   
 
1,428.1
 
   
 
1,353.8
 
   
 
5,803.7
 
   
 
5,618.3
 
Net Sales
   
$
1,062.2
 
   
$
932.7
 
   
$
4,289.0
 
   
$
3,833.4
 
Cost of products sold
   
 
901.2
 
   
 
755.5
 
   
 
3,689.4
 
   
 
3,225.5
 
Selling and administrative expenses
   
 
69.1
 
   
 
71.5
 
   
 
268.8
 
   
 
257.6
 
Depreciation
   
 
55.0
 
   
 
53.0
 
   
 
225.4
 
   
 
225.8
 
Unusual expenses (benefits):
                                    
Pension and other postretirement benefit corridor charge
   
 
816.8
 
   
 
192.2
 
   
 
816.8
 
   
 
192.2
 
Stock received in insurance demutualization
   
 
—  
 
   
 
(49.9
)
   
 
—  
 
   
 
(49.9
)
Insurance settlement
   
 
—  
 
   
 
—  
 
   
 
(23.9
)
   
 
—  
 
Impairment of equity investment
   
 
10.9
 
   
 
—  
 
   
 
10.9
 
   
 
—  
 
    
  
  
  
Total operating costs
   
 
1,853.0
 
   
 
1,022.3
 
   
 
4,987.4
 
   
 
3,851.2
 
Operating loss
   
 
(790.8
)
   
 
(89.6
)
   
 
(698.4
)
   
 
(17.8
)
Interest expense
   
 
30.1
 
   
 
32.6
 
   
 
128.3
 
   
 
133.1
 
Gain on sale of Anthem stock
   
 
—  
 
   
 
—  
 
   
 
24.1
 
   
 
—  
 
Other income (expense)
   
 
(4.4
)
   
 
0.9
 
   
 
(0.3
)
   
 
6.1
 
    
  
  
  
Loss before income taxes
   
 
(825.3
)
   
 
(121.3
)
   
 
(802.9
)
   
 
(144.8
)
Income tax benefit
   
 
(335.6
)
   
 
(44.9
)
   
 
(327.3
)
   
 
(53.6
)
    
  
  
  
Loss from continuing operations
   
 
(489.7
)
   
 
(76.4
)
   
 
(475.6
)
   
 
(91.2
)
Loss from discontinued operations, net of tax
   
 
—  
 
   
 
—  
 
   
 
0.5
 
   
 
1.2
 
Loss on sale of Sawhill Tubular, net of tax
   
 
—  
 
   
 
—  
 
   
 
6.4
 
   
 
—  
 
    
  
  
  
Loss before extraordinary item
   
 
(489.7
)
   
 
(76.4
)
   
 
(482.5
)
   
 
(92.4
)
Loss on early retirement of debt, net of tax
   
 
—  
 
   
 
—  
 
   
 
19.9
 
   
 
—  
 
    
  
  
  
Net loss
   
 
(489.7
)
   
 
(76.4
)
   
 
(502.4
)
   
 
(92.4
)
Less preferred stock dividends
   
 
—  
 
   
 
—  
 
   
 
1.5
 
   
 
0.7
 
    
  
  
  
Net loss applicable to common stock
   
$
(489.7
)
   
$
(76.4
)
   
$
(503.9
)
   
$
(93.1
)
    
  
  
  
Basic losses per share:
                                    
Loss from continuing operations
   
$
(4.54
)
   
$
(0.71
)
   
$
(4.42
)
   
$
(0.86
)
Loss from discontinued operations
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
0.01
 
Loss on sale of Sawhill Tubular
   
 
—  
 
   
 
—  
 
   
 
0.06
 
   
 
—  
 
Loss on early retirement of debt
   
 
—  
 
   
 
—  
 
   
 
0.19
 
   
 
—  
 
    
  
  
  
Net loss
   
$
(4.54
)
   
$
(0.71
)
   
$
(4.67
)
   
$
(0.87
)
    
  
  
  
Weighted average shares outstanding
   
 
107.9
 
   
 
107.7
 
   
 
107.9
 
   
 
107.7
 
Diluted losses per share:
                                    
Loss from continuing operations
   
$
(4.54
)
   
$
(0.71
)
   
$
(4.42
)
   
$
(0.86
)
Loss from discontinued operations
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
0.01
 
Loss on sale of Sawhill Tubular
   
 
—  
 
   
 
—  
 
   
 
0.06
 
   
 
—  
 
Loss on early retirement of debt
   
 
—  
 
   
 
—  
 
   
 
0.19
 
   
 
—  
 
    
  
  
  
Net loss
   
$
(4.54
)
   
$
(0.71
)
   
$
(4.67
)
   
$
(0.87
)
    
  
  
  
Weighted average shares outstanding
   
 
107.9
 
   
 
107.7
 
   
 
107.9
 
   
 
107.7
 

2

AK STEEL CORPORATION
 
FOURTH QUARTER 2002
(Unaudited)
 
SUPPLEMENTAL INFORMATION
 
    
Three Months Ended Dec. 31,
   
Twelve Months Ended Dec. 31,
    
2002
   
2001
   
2002
   
2001
Other data:
                            
Shipments (thousands of ton)
   
 
1,428.1
   
 
1,353.8
   
 
5,803.7
   
 
5,618.3
Steel operations selling price per ton
   
$
718
   
$
651
   
$
703
   
$
655
Operating profit per ton (1)
   
$
26
   
$
39
   
$
22
   
$
22
 
(1)
 
Excludes 4th quarter unusual items.
 
STEEL SHIPMENTS
 
    
Three Months Ended Dec. 31,
     
Twelve Months Ended Dec. 31,
  
    
2002
     
2001
     
2002
     
2001
  
Tons Shipped by Product (000’s)
                            
Stainless/Electrical
   
231.1
 
   
227.0
 
   
989.8
 
   
946.2
 
Coated
   
742.9
 
   
668.0
 
   
2,973.8
 
   
2,780.1
 
Cold Rolled
   
319.1
 
   
352.0
 
   
1,297.0
 
   
1,448.4
 
Tubular
   
21.8
 
   
18.3
 
   
91.3
 
   
31.8
 
Hot Rolled
   
43.2
 
   
18.3
 
   
168.4
 
   
117.6
 
Secondary
   
70.0
 
   
70.2
 
   
283.4
 
   
294.2
 
    
  
  
  
Total Shipments
   
1,428.1
 
   
1,353.8
 
   
5,803.7
 
   
5,618.3
 
    
  
  
  
Shipments by Product (%)
                            
Stainless/Electrical
   
16.2
%
   
16.8
%
   
17.1
%
   
16.8
%
Coated
   
52.0
%
   
49.3
%
   
51.2
%
   
49.5
%
Cold Rolled
   
22.3
%
   
26.0
%
   
22.3
%
   
25.8
%
Tubular
   
1.5
%
   
1.4
%
   
1.6
%
   
0.6
%
Hot Rolled
   
3.0
%
   
1.4
%
   
2.9
%
   
2.1
%
Secondary
   
5.0
%
   
5.1
%
   
4.9
%
   
5.2
%
    
  
  
  
Total Shipment
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%
    
  
  
  
 

3

AK STEEL CORPORATION
 
CONSOLIDATED BALANCE SHEETS
FOURTH QUARTER 2002
(Dollars in millions, except per share amounts)
    
December 31, 2002
     
December 31, 2001
  
Current Assets
                  
Cash and cash equivalents
   
$
282.5
 
   
$
101.0
 
Accounts and notes receivables–net
   
 
403.2
 
   
 
388.0
 
Inventories–net
   
 
870.3
 
   
 
904.6
 
Current assets held for sale
   
 
—  
 
   
 
60.6
 
Other current assets
   
 
143.7
 
   
 
93.6
 
    
  
Total Current Assets
   
 
1,699.7
 
   
 
1,547.8
 
    
  
Property, plant and equipment
   
 
4,811.6
 
   
 
4,742.9
 
Accumulated depreciation
   
 
(2,179.8
)
   
 
(1,974.6
)
    
  
Property, plant and equipment–net
   
 
2,631.8
 
   
 
2,768.3
 
Noncurrent assets held for sale
   
 
—  
 
   
 
24.4
 
Other
   
 
1,068.2
 
   
 
885.3
 
    
  
Total Assets
   
$
5,399.7
 
   
$
5,225.8
 
    
  
Liabilities and Shareholders’ Equity
                  
Current Liabilities
                  
Accounts payable
   
$
456.8
 
   
$
537.6
 
Other accruals
   
 
238.8
 
   
 
270.5
 
Current portion of long-term debt
   
 
62.5
 
   
 
78.0
 
Current portion of pension & postretirement benefit obligation
   
 
102.2
 
   
 
68.3
 
    
  
Total Current Liabilities
   
 
860.3
 
   
 
954.4
 
    
  
Long-term debt
   
 
1,259.9
 
   
 
1,324.5
 
Pension & postretirement benefit obligation
   
 
2,584.8
 
   
 
1,740.1
 
Other liabilities
   
 
165.4
 
   
 
173.5
 
    
  
Total Liabilities
   
 
4,870.4
 
   
 
4,192.5
 
    
  
Shareholders’ Equity
                 
Preferred stock–259,481 shares redeemed 9/30/02
   
 
—  
 
   
 
12.5
 
Common stock–2002; authorized 200,000,000 shares of $.01 par value each; 116,292,876 shares issued; 107,895,707 shares outstanding
   
 
1.2
 
   
 
1.2
 
Additional paid-in capital
   
 
1,812.1
 
   
 
1,807.2
 
Treasury stock–2002; 8,397,172 shares at cost
   
 
(122.0
)
   
 
(120.4
)
Retained earnings
   
 
(1,162.0
)
   
 
(667.2
)
    
  
Total Shareholders’ Equity
   
 
529.3
 
   
 
1,033.3
 
    
  
Total Liabilities and Shareholders’ Equity
   
$
5,399.7
 
   
$
5,225.8
 
    
  

4

AK STEEL CORPORATION
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOURTH QUARTER 2002
(Dollars in millions)
    
Twelve Months Ended Dec. 31,
  
    
2002
     
2001
  
Cash Flow From Operating Activities:
                  
Net loss
   
$
(502.4
)
   
$
(92.4
)
Depreciation
   
 
225.4
 
   
 
225.8
 
Amortization
   
 
9.8
 
   
 
14.7
 
Deferred taxes
   
 
(276.0
)
   
 
(52.8
)
Non-cash unusual items
   
 
827.7
 
   
 
142.3
 
Extraordinary item
   
 
19.9
 
   
 
—  
 
Working capital
   
 
(57.0
)
   
 
3.0
 
Other
   
 
63.1
 
   
 
(91.6
)
    
  
Net Cash Flow From Operating Activities
   
 
310.5
 
   
 
149.0
 
    
  
Cash Flow From Investing Activities:
                  
Capital investments
   
 
(93.8
)
   
 
(108.0
)
Other
   
 
94.8
 
   
 
32.8
 
    
  
Net Cash Flow From Investing Activities
   
 
1.0
 
   
 
(75.2
)
    
  
Cash Flow From Financing Activities:
                  
Principal payments on long-term debt
   
 
(628.0
)
   
 
(63.2
)
Premium payment on retirement of long-term debt
   
 
(25.1
)
   
 
—  
 
Proceeds on issuance of debt
   
 
538.1
 
   
 
—  
 
Common and preferred stock transactions
   
 
(14.7
)
   
 
(1.1
)
Preferred stock dividends
   
 
(0.9
)
   
 
(0.7
)
Common stock dividends
   
 
—  
 
   
 
(13.5
)
Other
   
 
(2.5
)
   
 
0.5
 
    
  
Net Cash Flow From Financing Activities
   
 
(133.1
)
   
 
(78.0
)
    
  
Cash Flow From Discontinued Operations
   
 
3.1
 
   
 
18.4
 
    
  
Net Increase (Decrease) in Cash
   
 
181.5
 
   
 
14.2
 
Cash and Cash Equivalents–Beginning
   
 
101.0
 
   
 
86.8
 
    
  
Cash and Cash Equivalents–Ending
   
$
282.5
 
   
$
101.0
 
    
  

5