AK STEEL HOLDING CORPORATION 
By In the news release, AK Steel Reports Fourth Quarter and Full-Year 2011 Financial Results, issued
AK Steel Reports Fourth Quarter and Full-Year 2011 Financial Results
WEST CHESTER, Ohio, Jan. 24, 2012 /PRNewswire/ -- AK Steel (NYSE: AKS) today reported a net loss of $193.9 million, or $1.76 per diluted share of common stock, for the fourth quarter of 2011, compared to a net loss of $98.3 million, or $0.89 per diluted share, for the fourth quarter of 2010. The 2011 fourth quarter results include a non-cash pre-tax pension corridor charge of $268.1 million, or $1.50 per diluted share. Excluding this amount, the company's adjusted net loss for the fourth quarter of 2011 was $28.0 million, or $0.26 per diluted share.
Net sales for the fourth quarter of 2011 were $1,509.2 million on shipments of 1,409,900 tons, compared to sales of $1,390.6 million on shipments of 1,359,900 tons for the year-ago fourth quarter. The company said its average selling price for the fourth quarter of 2011 was $1,070 per ton, approximately 5% higher than the $1,022 per ton reported for the fourth quarter of 2010, but an approximate 8% decrease from the $1,158 per ton for the third quarter of 2011.
The company reported an operating loss for the fourth quarter of 2011 of $300.7 million, which includes the $268.1 million pre-tax pension corridor charge. Excluding the pension corridor charge, the company's adjusted operating loss for the fourth quarter of 2011 was $32.6 million, or $23 per ton. The 2011 fourth quarter results also include a LIFO credit of $44.1 million. The company reported an operating loss of $154.6 million, or $114 per ton, for the fourth quarter of 2010. The 2010 fourth quarter results include a $63.7 million pre-tax charge related to the shutdown of the company's Ashland (KY) coke plant, and a $9.1 million pre-tax charge related to a retiree benefit settlement associated with the company's Butler (PA) Works.
"The economic recovery we've been anticipating for several years simply did not fully materialize in 2011 and we endured another round of raw material price increases," said James L. Wainscott, Chairman, President and Chief Executive Officer of AK Steel. "However, we made significant strides towards becoming more self-sufficient in raw materials - moves that will greatly improve our cost structure in the future." In October of 2011, AK Steel made strategic investments in iron ore and metallurgical coal, two of the most important raw materials the company utilizes in its steelmaking operations.
Full-Year 2011 Results
For the full year, AK Steel reported a net loss of $155.6 million, or $1.41 per diluted share, compared to a net loss of $128.9 million, or $1.17 per diluted share for 2010. The results for 2011 include the non-cash pre-tax pension corridor charge of $268.1 million, or $1.50 per diluted share, previously described. Excluding this amount, the company's adjusted net income for 2011 was $10.3 million, or $0.09 per diluted share. The results for 2010 include a non-cash charge of $25.3 million, or $0.23 per diluted share, related to federal healthcare legislation, as well as a $63.7 million pre-tax charge related to the shutdown of the company's Ashland (KY) coke plant, and a $9.1 million pre-tax charge related to a retiree benefit settlement associated with the company's Butler (PA) Works.
Sales for 2011 were $6,468.0 million, an increase of 8% compared to $5,968.3 million for 2010. Shipments for 2011 were 5,698,800 tons, a slight increase compared to 5,660,900 tons in 2010. The company reported an operating loss of $201.3 million, or $35 per ton, for 2011 which was largely a result of the pension corridor charge, compared to an operating loss of $133.9 million, or $24 per ton, for 2010. Excluding the pension corridor charge, the company's adjusted operating profit for the full year of 2011 was $66.8 million, or $12 per ton.
First Quarter 2012 Outlook
Due to continued uncertainty and volatility with respect to economic conditions in the U.S. and in other markets served by the company, AK Steel is not providing an outlook for the company's first quarter results at this time. However, the company said that it expects to provide first quarter guidance in March.
Use of Non-GAAP Financial Measures
In certain of its disclosures in this news release, the company has adjusted its operating profit (loss) and net income (loss) to exclude a pension corridor accounting charge. Reporting adjusted operating profit or loss and net income or loss (either as a total or on a per-ton basis) is not a financial measure under generally accepted accounting principles ("GAAP"). The company has made this adjustment, however, because Management believes that it enhances the understanding of the company's financial results. The company believes that this method of accounting for pension and other postretirement obligations is not typically used by other publicly traded companies. In addition, although it reduces reported operating and net income, it is a non-cash charge. Disclosing adjusted operating profit (loss) and net income (loss) with the corridor charge excluded from the actual quarterly results facilitates the ability of an investor to compare the company's actual results to its competitors and other publicly traded companies. Neither current shareholders nor potential investors in the company's securities should rely on adjusted operating profit (loss) or adjusted net income (loss) as a substitute for any GAAP financial measure and the company encourages investors and potential investors to review the reconciliation below of adjusted operating profit (loss) and net income (loss) to the comparable GAAP financial measure.
The following schedule reflects the reconciliation of the non-GAAP quarterly financial measures discussed in this news release:
(dollars in millions,
except per ton data) Three Twelve
Months Months
Ended Ended
December 31, December 31,
2011 2011
---- ----
Reconciliation to
Operating Profit
(Loss)
Adjusted operating
profit (loss) $(32.6) $66.8
Pension corridor
charge (268.1) (268.1)
Operating profit
(loss) $(300.7) $(201.3)
======= =======
Reconciliation to
Operating Profit
(Loss) per Ton
Adjusted operating
profit (loss) per
ton $(23) $12
Pension corridor
charge (190) (47)
Operating profit
(loss) per ton $(213) $(35)
===== ====
Reconciliation to Net
Income (Loss)
Attributable to AK
Steel Holding
Adjusted net income
(loss) attributable
to AK Steel Holding
Corporation $(28.0) $10.3
Pension corridor
charge ($268.1 less
tax of $102.2) (165.9) (165.9)
Net income (loss)
attributable to AK
Steel Holding
Corporation, as
reported $(193.9) $(155.6)
======= =======
Reconciliation to
Basic and Diluted
Earnings (Losses)
per Share
Adjusted basic and
diluted earnings
(losses) per share $(0.26) $0.09
Pension corridor
charge (1.50) (1.50)
Basic and diluted
earnings (losses)
per share, as
reported $(1.76) $(1.41)
====== ======
Safe Harbor Statement
The statements in this release with respect to future results reflect management's estimates and beliefs and are intended to be, and hereby are identified as "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "believes," "intends," "plans," "estimates" and other similar references to future periods typically identify such forward-looking statements. The company cautions readers that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management, including those risks and uncertainties discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2010, as updated in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. Except as required by law, the company disclaims any obligation to update any forward-looking statements to reflect future developments or events.
AK Steel
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6,200 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pennsylvania; Ashland, Kentucky; Rockport, Indiana; and its corporate headquarters in West Chester, Ohio. Additional information about AK Steel is available on the company's web site at www.aksteel.com.
AK Tube LLC, a wholly-owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio and Columbus, Indiana. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets. Additional information about AK Tube LLC is available on its web site at www.aktube.com.
AK Coal Resources, Inc., another wholly-owned subsidiary of AK Steel, owns or leases metallurgical coal reserves in Somerset County, Pennsylvania. AK Steel also owns 49.9% of Magnetation LLC, a joint venture headquartered in Grand Rapids, Minnesota, which produces iron ore concentrate from previously mined ore reserves.
AK STEEL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in millions, except per share and per ton data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2011 2010
2010 2011
---- ----
Shipments (000 tons) 1,409.9 1,359.9 5,698.8 5,660.9
Selling price per
ton $1,070 $1,022 $ $1,054
1,131
Net sales $1,509.2 $1,390.6 $ $5,968.3
6,468.0
Cost of products
sold (exclusive of
items shown below) 1,451.6 1,379.5 6,036.8 5,643.2
Selling and
administrative
expenses (exclusive
of items shown
below) 53.8 50.4 215.4 204.0
Depreciation 45.7 46.6 185.0 197.1
Pension and OPEB
expense (income)
(exclusive of
corridor charge
shown below) (9.3) (4.1) (36.0) (14.9)
Pension corridor
charge 268.1 - 268.1 -
Special and unusual
items - 72.8 - 72.8
--- ---- --- ----
Total operating
costs 1,809.9 1,545.2 6,669.3 6,102.2
------- ------- ------- -------
Operating profit
(loss) (300.7) (154.6) (201.3) (133.9)
Interest expense 13.8 7.1 47.5 33.0
Other income
(expense) (4.0) (1.8) (5.3) (7.6)
---- ---- ---- ----
Income (loss) before
income taxes (318.5) (163.5) (254.1) (174.5)
Income tax provision
due to tax law
change - - 2.0 25.3
Income tax provision
(benefit) (123.6) (65.0) (96.0) (69.1)
------ ----- ----- -----
Total income tax
provision (benefit) (123.6) (65.0) (94.0) (43.8)
-----
Net income (loss) (194.9) (98.5) (160.1) (130.7)
Less: Net loss
attributable to
noncontrolling
interests (1.0) (0.2) (4.5) (1.8)
---- ---- ---- ----
Net income (loss)
attributable to AK
Steel Holding
Corporation $(193.9) $(98.3) $(155.6) $(128.9)
======= ====== ======= =======
Basic and diluted
earnings per share:
Net income (loss)
attributable to AK
Steel Holding
Corporation $(1.76) $(0.89) $(1.41) $(1.17)
====== ====== ====== ======
Weighted-average
shares outstanding:
Basic 109.8 109.6 109.8 109.6
Diluted 109.8 109.6 109.8 109.6
Dividends declared
and paid per share $0.05 $0.05 $0.20 $0.20
AK STEEL HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions, except per share amounts)
December 31, December 31,
2011 2010
---- ----
ASSETS
Current assets:
Cash and cash equivalents $42.0 $216.8
Accounts receivable, net 564.2 482.8
Inventory, net 418.7 448.7
Other current assets 249.5 255.8
----- -----
Total current assets 1,274.4 1,404.1
------- -------
Property, plant and
equipment 5,967.2 5,668.2
Accumulated depreciation (3,797.0) (3,635.0)
-------- --------
Property, plant and
equipment, net 2,170.2 2,033.2
Other non-current assets 1,005.3 751.3
------- -----
TOTAL ASSETS $4,449.9 $4,188.6
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under credit
facility $250.0 $ -
Accounts payable 583.6 553.1
Accrued liabilities 172.8 145.0
Current portion of long-
term debt 0.7 0.7
Current portion of pension
and other postretirement
benefit obligations 130.0 145.7
----- -----
Total current liabilities 1,137.1 844.5
------- -----
Long-term debt 650.0 650.6
Pension and other
postretirement benefit
obligations 1,744.8 1,706.0
Other non-current
liabilities 540.8 346.4
----- -----
TOTAL LIABILITIES 4,072.7 3,547.5
------- -------
Stockholders' equity:
Common stock, authorized
200,000,000 shares of $.01
par value each; issued
123,229,210 and 122,829,975
shares in 2011 and 2010;
outstanding 110,284,228 and
109,986,790 shares in 2011
and 2010 1.2 1.2
Additional paid-in capital 1,922.2 1,909.4
Treasury stock, common
shares at cost, 12,944,982
and 12,843,185 shares in
2011 and 2010 (171.6) (170.1)
Accumulated deficit (1,366.0) (1,188.4)
Accumulated other
comprehensive income 2.7 92.6
--- ----
Total AK Steel Holding
Corporation stockholders'
equity 388.5 644.7
Noncontrolling interests (11.3) (3.6)
----- ----
TOTAL STOCKHOLDERS' EQUITY 377.2 641.1
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,449.9 $4,188.6
======== ========
AK STEEL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)
Twelve Months Ended
December 31,
------------
2011 2010
---- ----
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income (loss) $(160.1) $(130.7)
Special and unusual
items - 72.8
Pension corridor
charge 268.1 -
Depreciation 185.0 197.1
Amortization 15.5 16.8
Deferred income taxes (92.7) (37.7)
Contributions to
pension trust (170.0) (110.0)
Contributions to
Middletown and
Butler retirees
VEBAs (87.6) (65.0)
Pension and other
postretirement
benefit payments
greater than expense (114.7) (104.7)
Working capital 1.0 (9.2)
Working capital-
SunCoke Middletown (9.3) 0.3
Other operating
items, net (15.7) 37.9
----- ----
Net cash flows from
operating activities (180.5) (132.4)
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital investments (101.1) (117.1)
Capital investments-
SunCoke Middletown (195.0) (149.2)
Investments in
Magnetation LLC and
AK Coal Resources (125.4) -
Other investing
items, net 1.3 -
--- ---
Net cash flows from
investing activities (420.2) (266.3)
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Net borrowings under
credit facility 250.0 -
Proceeds from
issuance of long-
term debt - 549.1
Redemption of long-
term debt (0.7) (506.3)
Debt issuance costs (10.1) (11.3)
Proceeds from
exercise of stock
options 0.2 1.3
Purchase of treasury
stock (1.5) (7.9)
Common stock
dividends paid (22.0) (22.0)
Advances from
noncontrolling
interest owner to
SunCoke Middletown 210.7 151.7
Other financing
items, net (0.7) (0.8)
---- ----
Net cash flows from
financing activities 425.9 153.8
----- -----
Net decrease in cash
and cash equivalents (174.8) (244.9)
Cash and cash
equivalents,
beginning of period 216.8 461.7
----- -----
Cash and cash
equivalents, end of
period $42.0 $216.8
===== ======
AK STEEL HOLDING CORPORATION
STEEL SHIPMENTS
(Unaudited)
(Tons in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Tons Shipped
by Product
Stainless/
electrical 200.9 208.1 900.3 866.0
Coated 611.2 613.6 2,441.5 2,558.4
Cold-rolled 262.9 352.2 1,204.1 1,241.2
Tubular 30.7 29.3 130.1 123.8
---- ---- ----- -----
Subtotal
value-
added
shipments 1,105.7 1,203.2 4,676.0 4,789.4
Hot-rolled 251.3 114.9 873.5 706.3
Secondary 52.9 41.8 149.3 165.2
---- ---- ----- -----
Subtotal non
value-
added
shipments 304.2 156.7 1,022.8 871.5
----- ----- ------- -----
Total
shipments 1,409.9 1,359.9 5,698.8 5,660.9
======= ======= ======= =======
Shipments by
Product (%)
Stainless/
electrical 14.2% 15.3% 15.8% 15.3%
Coated 43.4% 45.1% 42.9% 45.2%
Cold-rolled 18.6% 25.9% 21.1% 21.9%
Tubular 2.2% 2.2% 2.3% 2.2%
--- --- --- ---
Subtotal
value-
added
shipments 78.4% 88.5% 82.1% 84.6%
Hot-rolled 17.8% 8.4% 15.3% 12.5%
Secondary 3.8% 3.1% 2.6% 2.9%
--- --- --- ---
Subtotal non
value-
added
shipments 21.6% 11.5% 17.9% 15.4%
---- ---- ---- ----
Total
shipments 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
SOURCE AK Steel
