AK Steel Reports Fourth Quarter and Record Full-Year 2007 Results

 

West Chester, OH, January 22, 2008— AK Steel (NYSE: AKS) today reported 2007 fourth quarter net income of $106.7 million, or $0.95 per diluted share of common stock, compared to a net loss of $49.3 million, or $0.45 per diluted share, in the 2006 fourth quarter. The net loss in the fourth quarter of 2006 included a pre-tax, non-cash "corridor" charge of $133.2 million for actuarial losses related to the company's retiree health care benefit plans. There was no corridor charge in 2007.

Net sales for the fourth quarter of 2007 were $1,691.9 million on shipments of 1,568,100 tons. Sales and shipments in the fourth quarter of 2007 were approximately 7% and 3% higher, respectively, than in the year-ago period. The company's average selling price was $1,079 per ton for the fourth quarter of 2007, approximately 4% higher than in the year-ago period.

Operating profit for the fourth quarter of 2007 was $153.5 million, or $98 per ton, compared to an operating loss of $81.9 million, or $54 per ton, for the fourth quarter of 2006. Adjusted operating profit for the fourth quarter of 2006 was $51.3 million, or $34 per ton, excluding the corridor charge referred to above.

The following schedule reflects the reconciliation of the non-GAAP quarterly financial measures discussed within this news release:

(Dollars in millions)   Three Months Ended
December 31,
    2007   2006
Reconciliation to net income (loss)
Adjusted income before income taxes (excluding items below)   $ 164.1   $ 34.5
Other postretirement benefit corridor charge   -   (133.2)
Income (loss) before income taxes   164.1   (98.7)
Income tax benefit (provision)   (57.4)   49.4
Net income (loss)   $ 106.7   $ (49.3)
 
Reconciliation to operating profit (loss)
Adjusted operating profit (excluding items below)   $ 153.5   $ 51.3
Other postretirement benefit corridor charge   -   (133.2)
Operating profit (loss)   $ 153.5   $ (81.9)
 
Reconciliation to operating profit (loss) per ton
Adjusted operating profit per ton (excluding items below)   $ 98   $ 34
Other postretirement benefit corridor charge   -   (88)
Operating profit (loss) per ton   $ 98   $ (54)
 

Record Full-Year Results
For the full year, AK Steel earned net income of $387.7 million, or $3.46 per diluted share in 2007, compared to net income of $12.0 million, or $0.11 per diluted share for the full year in 2006. Net income for 2007 includes $39.8 million in one-time, pre-tax charges related to the implementation of new labor agreements at the company's Mansfield (OH) and Middletown (OH) plants. The 2006 net income included the corridor charge previously discussed, as well as $15.8 million of one-time charges related to the implementation of new labor agreements at the company's Butler (PA) and Zanesville (OH) plants.

Net sales for 2007 were a record $7,003.0 million on record shipments of 6,478,700 tons, compared to net sales of $6,069.0 million and shipments of 6,168,600 tons in 2006. Sales and shipments in 2007 were approximately 15% and 5% higher, respectively, than in the year-ago period. AK Steel's average selling price for 2007 rose to a record $1,081 per ton, approximately 10% higher than the 2006 average of $984 per ton.

The company had adjusted operating profit for 2007 of $664.2 million, equal to a record $103 per ton, compared to adjusted operating profit of $214.6 million, or $35 per ton, for 2006. Including the additional charges mentioned above, 2007 operating profit was $624.4 million, or $96 per ton, compared to 2006 operating profit of $65.6 million, or $11 per ton. AK Steel ended 2007 with a cash balance of $713.6 million. The following schedule reflects the reconciliation of the non-GAAP financial measures discussed above:

(Dollars in millions)   Twelve Months Ended
December 31,
    2007   2006
Reconciliation to net income
Adjusted income before income taxes (excluding items below)   $  631.1   $ 145.9
Other postretirement benefit corridor charge   -   (133.2)
Curtailment charges   (39.8)   -
Costs associated with Butler and Zanesville labor agreements   -   (15.8)
Income (loss) before income taxes   591.3   (3.1)
Income tax benefit (provision)   (215.0)   20.8
State tax law change impact   11.4   (5.7)
Net Income   $ 387.7   $ 12.0
 
Reconciliation to operating profit
Adjusted operating profit (excluding items below)   $ 664.2   $ 214.6
Other postretirement benefit corridor charge   -   (133.2)
Curtailment charges   (39.8)   -
Costs associated with Butler and Zanesville labor agreements   -   (15.8)
Operating profit   $ 624.4   $ 65.6
 
Reconciliation of operating profit per ton
Adjusted operating profit per ton (excluding items below)   $ 103   $ 35
Other postretirement benefit corridor charge   -   (22)
Costs associated with Butler and Zanesville labor agreements   -   (2)
Curtailment charges   (7)   -
Operating profit per ton   $ 96   $ 11
 

2007 - Putting The Pedal To The Metal
"A year ago we set the tone for 2007 by declaring that it was time to 'put the pedal to the metal' in every aspect of AK Steel's operating, customer service and financial performance," said James L. Wainscott, chairman, president and CEO. "Indeed, our management and employees delivered record results in every key metric, and we have taken another huge step toward realizing the potential of our company. Importantly, shareholders were rewarded during the year with a substantial increase in the market value of AK Steel."

First Quarter 2008 Outlook
AK Steel said it expects shipments in the first quarter of 2008 to be comparable to the fourth quarter of 2007 level. The company anticipates that its first quarter 2008 average per-ton selling prices will be 5% to 6% higher than in the fourth quarter of 2007. The higher per-ton selling prices are expected to be partially offset by higher raw material costs, compared to fourth quarter 2007 levels. The company said it expects to generate an operating profit in the first quarter of 2008 of approximately $100 per ton.

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. 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 AK Steel's Annual Report on Form 10-K for the year ended December 31, 2006, and in subsequent Quarterly Reports on Form 10-Q. Except as required by law, the company disclaims any obligation to update any forward-looking statements to reflect future developments or events.

About 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 6,500 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.

 

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