SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 1-13696
AK STEEL HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 31-1401455 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 703 Curtis Street, Middletown, Ohio | 45043 | |
| (Address of principal executive offices) | (Zip Code) |
(513) 425-5000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
108,762,954 shares of common stock
(as of August 5, 2004)
AK STEEL HOLDING CORPORATION
| Page | ||||
| PART I. |
FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements |
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| Consolidated Statements of Operations - Three- and Six-Month Periods Ended June 30, 2004 and 2003 |
1 | |||
| Consolidated Balance Sheets - As of June 30, 2004 and December 31, 2003 |
2 | |||
| Condensed Consolidated Statements of Cash Flows - Six-Month Periods Ended June 30, 2004 and 2003 |
3 | |||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
| Item 4. |
17 | |||
| PART II. |
OTHER INFORMATION |
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| Item 1. |
17 | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
18 | ||
| Item 4. |
18 | |||
| Item 5. |
18 | |||
| Item 6. |
19 | |||
| 20 | ||||
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
AK STEEL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| (unaudited) | 2004 |
2003 |
2004 |
2003 |
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| Net sales |
$ | 1,311.8 | $ | 981.3 | $ | 2,446.2 | $ | 1,966.6 | ||||||||
| Cost of products sold (exclusive of items shown below) |
1,147.2 | 974.2 | 2,173.6 | 1,886.2 | ||||||||||||
| Selling and administrative expenses |
54.4 | 65.4 | 106.9 | 124.9 | ||||||||||||
| Depreciation |
53.8 | 56.9 | 107.8 | 113.8 | ||||||||||||
| Total operating costs |
1,255.4 | 1,096.5 | 2,388.3 | 2,124.9 | ||||||||||||
| Operating profit (loss) |
56.4 | (115.2 | ) | 57.9 | (158.3 | ) | ||||||||||
| Interest expense |
27.6 | 28.5 | 57.3 | 57.1 | ||||||||||||
| Other income (expense) |
(1.4 | ) | 1.1 | 0.2 | 2.3 | |||||||||||
| Income (loss) from continuing operations before income taxes |
27.4 | (142.6 | ) | 0.8 | (213.1 | ) | ||||||||||
| Income tax provision (benefit) |
7.2 | (56.0 | ) | (3.0 | ) | (84.1 | ) | |||||||||
| Income (loss) from continuing operations |
20.2 | (86.6 | ) | 3.8 | (129.0 | ) | ||||||||||
| Discontinued operations (Note 8): |
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| Income from discontinued operations, net of tax |
1.1 | 8.4 | 8.0 | 10.0 | ||||||||||||
| Gain on sale of discontinued operations, net of tax |
71.4 | — | 246.3 | — | ||||||||||||
| Net income (loss) |
$ | 92.7 | $ | (78.2 | ) | $ | 258.1 | $ | (119.0 | ) | ||||||
| Income (loss) per share (Note 2): |
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| Basic and diluted income (loss) per share: |
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| Income (loss) from continuing operations |
$ | 0.18 | $ | (0.80 | ) | $ | 0.03 | $ | (1.19 | ) | ||||||
| Income from discontinued operations |
0.01 | 0.08 | 0.07 | 0.09 | ||||||||||||
| Gain on sale of discontinued operations |
0.66 | — | 2.27 | — | ||||||||||||
| Net income (loss) |
$ | 0.85 | $ | (0.72 | ) | $ | 2.37 | $ | (1.10 | ) | ||||||
| Common shares and common share equivalents outstanding (weighted average in millions): |
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| Basic |
108.7 | 108.5 | 108.7 | 108.4 | ||||||||||||
| Diluted |
109.0 | 108.5 | 109.0 | 108.4 | ||||||||||||
See notes to consolidated financial statements.
-1-
AK STEEL HOLDING CORPORATION
(dollars in millions)
| (unaudited) | ||||||||
| June 30, 2004 |
December 31, 2003 |
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| ASSETS |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 266.8 | $ | 54.7 | ||||
| Accounts receivable |
592.5 | 399.3 | ||||||
| Inventories (Note 3) |
723.9 | 730.9 | ||||||
| Deferred tax asset (Note 7) |
105.0 | 99.0 | ||||||
| Current assets held for sale (Note 8) |
— | 46.5 | ||||||
| Other current assets |
26.6 | 27.6 | ||||||
| Total Current Assets |
1,714.8 | 1,358.0 | ||||||
| Property, Plant and Equipment |
4,824.3 | 4,793.9 | ||||||
| Less accumulated depreciation |
(2,466.7 | ) | (2,360.0 | ) | ||||
| Property, plant and equipment, net |
2,357.6 | 2,433.9 | ||||||
| Other Assets: |
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| Restricted proceeds from industrial revenue bond offering |
55.4 | — | ||||||
| Investment in AFSG Holdings, Inc. |
55.6 | 55.6 | ||||||
| Other investments |
62.8 | 110.0 | ||||||
| Goodwill |
37.1 | 37.1 | ||||||
| Other intangible assets |
76.7 | 80.3 | ||||||
| Deferred tax asset (Note 7) |
811.0 | 827.5 | ||||||
| Non-current assets held for sale (Note 8) |
— | 65.5 | ||||||
| Other assets |
51.9 | 57.7 | ||||||
| TOTAL ASSETS |
$ | 5,222.9 | $ | 5,025.6 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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| Current Liabilities: |
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| Accounts payable |
$ | 307.1 | $ | 376.3 | ||||
| Accrued liabilities |
225.4 | 181.9 | ||||||
| Current liabilities of discontinued operations (Note 8) |
— | 16.8 | ||||||
| Current portion of long-term debt |
— | 62.5 | ||||||
| Current portion of pension and other postretirement benefit obligations |
147.4 | 141.4 | ||||||
| Total Current Liabilities |
679.9 | 778.9 | ||||||
| Non-current Liabilities: |
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| Long-term debt |
1,260.0 | 1,197.8 | ||||||
| Pension and other postretirement benefit obligations |
2,918.4 | 2,940.6 | ||||||
| Non-current liabilities of discontinued operations (Note 8) |
— | 9.1 | ||||||
| Other liabilities |
142.5 | 152.0 | ||||||
| Total Non-current Liabilities |
4,320.9 | 4,299.5 | ||||||
| TOTAL LIABILITIES |
5,000.8 | 5,078.4 | ||||||
| Stockholders’ Equity (Deficit): |
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| Common stock, authorized 200,000,000 shares of $.01 par value each; issued 2004, 117,304,093 shares, 2003, 117,082,911 shares; outstanding 2004, 108,750,681 shares, 2003, 108,577,655 shares |
1.2 | 1.2 | ||||||
| Additional paid-in capital |
1,819.2 | 1,815.9 | ||||||
| Treasury stock, common shares at cost 2004, 8,553,412 shares; 2003, 8,505,256 shares |
(122.9 | ) | (122.7 | ) | ||||
| Accumulated deficit |
(1,286.1 | ) | (1,544.2 | ) | ||||
| Accumulated other comprehensive loss (Note 9) |
(189.3 | ) | (203.0 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
222.1 | (52.8 | ) | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 5,222.9 | $ | 5,025.6 | ||||
See notes to consolidated financial statements.
-2-
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
| (unaudited) | Six Months Ended June 30, |
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| 2004 |
2003 |
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| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net income (loss) |
$ | 258.1 | $ | (119.0 | ) | |||
| Depreciation and amortization |
116.2 | 118.7 | ||||||
| Deferred income taxes |
(4.2 | ) | (80.2 | ) | ||||
| Pension and other postretirement benefit expense in excess of payments |
14.0 | 66.1 | ||||||
| Exclusion of income from and gain on sale of discontinued operations |
(254.3 | ) | (10.0 | ) | ||||
| Working capital |
(217.5 | ) | (24.8 | ) | ||||
| Other |
(8.2 | ) | 5.3 | |||||
| Net cash flows from operating activities of continuing operations |
(95.9 | ) | (43.9 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Capital investments |
(28.5 | ) | (41.3 | ) | ||||
| Purchase of investments |
(0.7 | ) | (1.1 | ) | ||||
| Proceeds from draw on industrial revenue bond restricted cash |
6.3 | — | ||||||
| Proceeds from sale of businesses |
337.5 | — | ||||||
| Proceeds from sale of other assets and investments |
48.5 | 2.9 | ||||||
| Other |
— | (0.6 | ) | |||||
| Net cash flows from investing activities of continuing operations |
363.1 | (40.1 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Principal payment on retirement of long-term debt |
(62.5 | ) | — | |||||
| Premium and fees on retirement of long-term debt |
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