EMERGE As a Stronger Company in 2014
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EMERGE as a stronger company in 2014 ANNUAL REPORT AND FORM 10-K 2014 9853c1.indd 1 4/1/15 8:04 AM EMERGE AS A STRONGER COMPANY IN 2014: At AK Steel, we were determined to “EMERGE as a stronger company” in 2014 by striving to Execute our plans, Maintain our focus on our key values, Enhance our earnings and cash flow as we continued to seek the full benefits of our Raw materials strategic initiatives, Grow profitable sales and enhance margins because we are Energized for our future. single OSHA recordable injury. And, our Works, and Coshocton Works each James L. Wainscott Zanesville plant continued its record-setting also setting records for retreats. Chairman, President and performance for OSHA lost workday Both our carbon and specialty steel Chief Executive Officer cases, finishing the year with 4,270 customers ranked AK Steel “Number days without an OSHA lost workday. One” in quality compared to our peers, Our Butler Works tied its best ever according to independent surveys by record for OSHA recordables and Jacobson and Associates for 2014. newly-acquired Dearborn Works and At AK Steel, serving customers better Overall, 2014 was a year of Mountain State Carbon, LLC set their than any other steelmaker with some of the progress for AK Steel. Despite battling best annual records for both OSHA finest carbon, stainless and electrical steel unprecedented extreme winter weather recordables and lost workday cases. products produced anywhere in the world conditions, energy price spikes, a shortage In addition, our Middletown Works is at the heart of who we are. The high of iron ore pellets and operational coke plant was honored for being one rankings we receive are important because challenges, the men and women of AK of the three safest cokemaking facilities they speak to the solid relationships that Steel overcame adversity and rose to the in America in 2014. By operating the we strive to build with all of our customers. challenge. We achieved adjusted net entire year without any OSHA recordable income for each of the final three quarters injuries, the plant earned the coveted Max of the year. In fact, our financial results Eward Safety Award from the American for the full-year 2014 represented our Coke and Coal Chemicals Institute. best annual performance since 2008 – This recognition marks the eleventh time when the “Great Recession” began. that our Middletown Works coke plant $690 million For the full-year 2014, AK Steel’s has received the award. And, both of acquisition completed. revenues reached approximately $6.5 our AK Tube plants received the Safety billion on shipments of about 6.1 million Award of Merit from the Fabricators Dearborn Acquisition – tons. Our average selling price for and Manufacturers Association. A Transformational Deal 2014 was $1,058 per ton, and we These outstanding achievements speak At the forefront of our successful ended the year 2014 with solid liquidity volumes about our people and our culture investments for 2014 was our of approximately $872 million. of safety at AK Steel. I offer my sincere transformational acquisition of Dearborn In addition, for the first time in nearly thanks to all of our employees who make Works. This approximately $690 million three decades, we completed a very safety their number one priority every day. acquisition is already exceeding our own important hearth reline maintenance high expectations. It has strengthened outage at our blast furnace in Ashland, AK Steel as a premier North American Kentucky. Completion of this outage, steel manufacturer, and enhanced our which was prudently advanced from ability to serve customers with increased 2015, positions us well to serve our size, scale, and operational flexibility. customers’ needs for years to come. From a cost-based synergy standpoint, we are exceeding our previously- Safety First, First In Safety Max Eward announced targets and now believe Safety is our top priority at AK Steel, Safety Award Winner the potential exists, partly dependent on and in 2014 we continued our industry- market conditions, to double our projected leading safety performance. As a result AK Steel’s Middletown Works coke plant amount of expected year one synergies. received prestigious recognition for its 2014 of our commitment to safety, the company safety performance. Since we have acquired the assets, we received significant recognition. continue to see more opportunities ahead. Our Coshocton Works, Zanesville So we’re raising the bar and setting Works and AK Tube plant in Quality Performance higher expectations in all areas, doing Walbridge, Ohio, each received On the quality front, we established more and doing better, faster, with better awards for safety from the Ohio Bureau several all-time best records for internal quality and safer than in the past. That is of Workers’ Compensation Division quality performance in 2014. Both who we are at AK Steel and that’s what of Safety and Hygiene in 2014. Butler Works and Zanesville Works we are bringing to Dearborn Works. Of special note, our Rockport Works set all-time internal reject and retreat To enhance our profit margins over operated the entire year 2014 without a records with Rockport Works, Mansfield the long-term, we also completed 9853c1.indd 2 4/1/15 8:04 AM our investments in our strategic raw the future of steelmaking in America, funding requirements will decrease material ventures which are part of and our company’s continued industry dramatically over the next two years. our long-term strategy to hedge our leadership as a technical innovator in the raw material needs, improve our self steel business. The new Research and DRIVEN to Perform in 2015 sufficiency, and reduce our costs. Innovation Center will be customer-focused, Despite the obstacles, the men and Construction of Magnetation’s new providing advanced technical support to women of AK Steel persevered in 2014. iron ore pellet plant in Reynolds, our valued customers, and developing We maintained and enhanced our ability Indiana was completed ahead of new and improved products for our to compete, and to win, in the global schedule. The plant provided initial markets. We expect to break ground for steel marketplace. We have an excellent pellets in the fourth quarter of 2014. this cutting-edge research facility in the management team with a track record late spring or early summer of 2015. of success that will continue to serve the company well in 2015 and beyond. Corporate Responsibility In addition, AK Steel is well-served by At AK Steel, we strive to operate its Board of Directors, including Robert responsibly across all aspects of our H. Jenkins (Lead Director), Richard A. business. We believe that economic Abdoo, John S. Brinzo, Dennis C. Cuneo, and environmental sustainability Mark G. Essig, William K. Gerber, are extremely important to our Ralph S. (“Mike”) Michael III, Shirley D. country and our communities. Peterson, Dr. James A. Thomson and Rendering of AK Steel’s new world-class In recognition of our commitment Vicente Wright. I am also pleased to Research and Innovation Center. to the environment through a creek welcome, Sheri H. Edison, as the newest restoration project, we were named member of our Board of Directors. I Research and Innovation a finalist for the “Environmental would like to take this opportunity to AK Steel’s focus is on the future of Stewardship Award” in 2014, which is thank each of them for his or her strong steelmaking in America. We are bringing presented by American Metal Market, support and leadership in 2014. I would innovative new products to the market to a leading metal industry publication. especially like to thank Shirley Peterson, meet our customers’ needs today and in With regard to sustainability, AK Steel who is retiring from our Board in May the future with products like our recently- entered into an agreement with Toyota of 2015 after 11 years of dedicated introduced CHROMESHIELD® 22. This Motor Engineering & Manufacturing service. We sincerely appreciate Shirley’s breakthrough nickel-free stainless steel North America, Inc. (TEMA) and Green service to the company and wish her product provides enhanced benefits and Metals, Inc. to recycle cast iron borings great success in her future endeavors. more predictable pricing for our customers. and other materials. While still in the Developed by AK Steel researchers, development phase, the project is another CHROMESHIELD® 22 provides corrosion example of the innovative work that resistance that meets or exceeds the manufacturers, suppliers and recycling performance of conventional nickel-bearing experts are pioneering together to reuse stainless steels, and at a lower cost. viable materials and reduce waste. Shirley D. Peterson AK Steel is also at the forefront of On a personal note, I was honored Member, AK Steel technology for Advanced High Strength to serve as the Chair for the United Board of Directors Steels for automotive light-weighting Way of Greater Cincinnati’s 2014 applications. Today, AK Steel produces fundraising campaign which raised over all of the coated grades of Advanced $61 million to make a positive difference AK Steel proved that, indeed, it could High Strength Steels that our customers in the lives of others in the region. “EMERGE” as a stronger company currently require. To ensure we are well- in 2014. And we are “DRIVEN to positioned to serve our customers’ needs Sound Financial Management Perform” in 2015, acutely focused for future light-weighting applications, we All of the progress we made in 2014 on achieving things that matter are actively involved in both internal and positions us well for the future as we greatly to AK Steel, including: collaborative research and development expect to benefit from continued gains in efforts of true third-generation steel products our chosen markets, significant reductions Dearborn Works synergies achieved to meet future needs.