Middletown, OH, October 24, 2003—AK Steel (NYSE: AKS) today reported a net loss of $277.5 million, or $2.56 per diluted share of common stock, for the third quarter of 2003.  Net sales were $1,064.5 million on shipments of 1,502,700 tons.  Included in the net loss were non-cash charges of $101.2 million for the impairment of goodwill and $87.3 million for the write-down of a deferred tax asset. The impaired goodwill related to certain steel assets acquired by Armco prior to its 1999 merger with AK Steel.  The deferred tax asset charge is associated with the tax benefits of certain net operating loss carryforwards the company said it might not be able to utilize prior to their expiration.  Excluding the two non-cash charges, the net loss was $89.0 million, or $0.82 per diluted share of common stock.

The company said that increased shipments in the 3rd quarter of 2003 compared to the 3rd quarter of 2002 were largely the result of additional spot market sales.  However, the company said shipments for the first nine months of 2003 were lower than for the same period in 2002, the result of reduced shipping volumes to automotive and appliance markets. Compared to the prior year 3rd quarter, the company said its average flat-rolled selling price decreased about 9%, from $721 per ton to $654 per ton.

AK Steel said that continuing high prices for raw materials and energy, lower production volumes, a less favorable product mix and an increase in pension and retiree health care benefit expenses contributed to the company’s net loss.

“Our operating results for the most recent quarter were similar to the preceding quarter.   We anticipate improvements in the 4th quarter, primarily as a result of lower operating costs as well as an improved product mix,” said James L. Wainscott, president and chief executive officer of AK Steel.  “We recognize the challenges we face and we are approaching each one with a strategic solution.” 

20% Salaried Workforce Reduction Announced

The company also announced today that it was eliminating the jobs of about 20% of its steel operations salaried workforce, affecting approximately 475 employees.  The job reductions, expected to begin by the end of October, should  result in annual savings of approximately $35 million beginning in 2004.  The company intends to offer severance payments based on years of service, as well as outplacement assistance, to affected eligible employees, and will record a 4th quarter charge of approximately $11 million for the associated costs.

“While we have worked to avoid reductions in force, we cannot avoid actions that affect jobs as part of our return to profitability,” said Mr. Wainscott.  “I have the utmost respect for our affected employees who have been part of a winning team, but the rules have changed and so must we.”

AK Steel, headquartered in Middletown, produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products.  AK Steel has steel producing and finishing facilities in Middletown, Coshocton, Mansfield, Walbridge, and Zanesville, Ohio; Ashland, Kentucky; Rockport and Columbus Indiana; and Butler, Pennsylvania.  AK Steel also produces snow and ice control products, and operates a major industrial park on the Houston, Texas ship channel.

Click here for Financial Tables. (PDF)