Table of Contents
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 March 31, 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 (I.R.S. Employer incorporation or organization) 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.
108,704,401 shares of common stock (as of April 30, 2004)
Table of Contents
AK STEEL HOLDING CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - Three-Month Periods Ended March 31, 2003 and 2004 1
Consolidated Balance Sheets - As of December 31, 2003 and March 31, 2004 2
Condensed Consolidated Statements of Cash Flows - Three-Month Periods Ended March 31, 2003 and 2004 3
Notes to Consolidated Financial Statements 4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
Item 4. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17 Table of Contents
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 (unaudited) March 31,
2003 2004
Net sales $ 985.3 $1,134.4
Cost of products sold 912.0 1,026.4 Selling and administrative expenses 59.5 52.5 Depreciation 56.9 54.0
Total operating costs 1,028.4 1,132.9
Operating profit (loss) (43.1) 1.5 Interest expense 28.6 29.7 Other income 1.2 1.6
Loss before income taxes (70.5) (26.6)
Income tax benefit 28.1 10.2
Loss from continuing operations (42.4) (16.4)
Discontinued operations: (Note 6) Income from discontinued operations, net of tax 1.6 6.9 Gain on sale of discontinued operations, net of tax — 174.9
Net income (loss) $ (40.8) $ 165.4
Basic and diluted income (loss) per share: (Note 2) Loss from continuing operations $ (0.39) $ (0.15) Income from discontinued operations 0.01 0.06 Gain on sale of discontinued operations — 1.61
Net income (loss) per share $ (0.38) $ 1.52
Common shares and common share equivalents outstanding (weighted average in millions): 108.4 108.7
See notes to consolidated financial statements.
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AK STEEL HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS (dollars in millions)
(unaudited) December 31, March 31, 2003 2004
ASSETS
Current Assets: Cash and cash equivalents $ 54.7 $ 299.9 Accounts receivable 399.3 478.2 Inventories (Note 3) 730.9 782.0 Deferred tax asset 99.0 108.7 Current assets held for sale 46.5 1.7 Other current assets 27.6 28.9
Total Current Assets 1,358.0 1,699.4
Property, Plant and Equipment 4,793.9 4,804.8 Less accumulated depreciation (2,360.0) (2,414.1)
Property, plant and equipment, net 2,433.9 2,390.7
Other Assets: Investment in AFSG Holdings, Inc. 55.6 55.6 Other investments 110.0 92.8 Goodwill 37.1 37.1 Other intangible assets 80.3 80.2 Deferred tax asset 827.5 793.9 Non-current assets held for sale 65.5 28.6 Other assets 57.7 53.8
TOTAL ASSETS $ 5,025.6 $ 5,232.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities: Notes payable $ — $ 80.0 Accounts payable 376.3 327.5 Accrued liabilities 181.9 203.5 Current liabilities of discontinued operations 16.8 0.6 Current portion of long-term debt 62.5 62.5 Current portion of pension and other postretirement benefit obligations 141.4 141.4
Total Current Liabilities 778.9 815.5
Non-current Liabilities: Long-term debt 1,197.8 1,197.9 Pension and other postretirement benefit obligations 2,940.6 2,956.7 Non-current liabilities of discontinued operations 9.1 — Other liabilities 152.0 145.6
Total Non-current Liabilities 4,299.5 4,300.2
TOTAL LIABILITIES 5,078.4 5,115.7
Stockholders’ Equity: Common stock, authorized 200,000,000 shares of $.01 par value each; issued 2003, 117,082,911 shares, 2004, 117,247,012 shares; outstanding 2003, 108,577,655 shares, 2004, 108,706,511 shares 1.2 1.2 Additional paid-in capital 1,815.9 1,817.1 Treasury stock, common shares at cost, 2003, 8,505,256 shares; 2004, 8,540,501 shares (122.7) (122.8) Accumulated deficit (1,544.2) (1,378.8) Accumulated other comprehensive loss (Note 7) (203.0) (200.3)
TOTAL STOCKHOLDERS’ EQUITY (52.8) 116.4
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 5,025.6 $ 5,232.1
See notes to consolidated financial statements.
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AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions)
Three Months Ended (unaudited) March 31,
2003 2004
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (40.8) $ 165.4 Depreciation and amortization 59.3 57.8 Deferred income taxes (28.1) (10.7) Pension and other postretirement benefit expense in excess of payments 41.0 16.2 Exclusion of income from and gain on sale of discontinued operations (1.6) (181.8) Working capital (53.0) (162.3) Other 1.4 (3.7)
Net cash flows from operating activities of continuing operations (21.8) (119.1)
CASH FLOWS FROM INVESTING ACTIVITIES: Capital investments (15.0) (10.8) Purchase of investments (0.9) — Proceeds from sale of business — 263.9 Proceeds from sale of investments 1.3 18.8 Other (0.3) (0.1)
Net cash flows from investing activities of continuing operations (14.9) 271.8
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuing notes payable — 80.0 Purchase of treasury stock (0.5) (0.2) Other 0.9 (0.1)
Net cash flows from financing activities of continuing operations 0.4 79.7
Cash flows from discontinued operations 3.0 12.8
Net increase (decrease) in cash and cash equivalents (33.3) 245.2
Cash and cash equivalents, beginning of period 282.5 54.7
Cash and cash equivalents, end of period $ 249.2 $ 299.9
Supplemental disclosure of cash flow information:
Net cash paid (received) during the period for: Interest, net of capitalized interest $ 24.9 $ 26.4 Income taxes (0.1) 0.1
Supplemental disclosure of non-cash investing and financing activities — Issuance of restricted stock $ 5.3 $ 0.8
See notes to consolidated financial statements.
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AK STEEL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data)
1. Basis of Presentation
In the opinion of the management of AK Steel Holding Corporation (“AK Holding”) and AK Steel Corporation (“AK Steel”, and together with AK Holding, the “Company”), the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2004 and the results of its operations and cash flows for the three- month periods ended March 31, 2003 and 2004. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2003.
2. Earnings Per Share
Three Months Ended March 31,
2003 2004
Income (loss) for calculation of basic and diluted earnings per share: Loss from continuing operations $ (42.4) $ (16.4) Income from discontinued operations 1.6 6.9 Gain on sale of discontinued operations — 174.9
Net income (loss) $ (40.8) $ 165.4
Weighted average common shares (in millions) 108.4 108.7
Basic and diluted income (loss) per share: Loss from continuing operations $ (0.39) $ (0.15) Income from discontinued operations 0.01 0.06 Gain on sale of discontinued operations — 1.61
Net income (loss) per share $ (0.38) $ 1.52
Potentially issuable common shares (in millions) excluded from earnings per share calculation due to antidilutive effect 4.2 5.2
3. Inventories
Inventories are valued at the lower of cost or market. The cost of the majority of inventories is measured on the last in, first out (LIFO) method. Other inventories are measured principally at average cost.
December 31, March 31, 2003 2004
Finished and semi-finished $ 641.8 $ 712.6 Raw materials 180.0 186.7
Total cost 821.8 899.3 Adjustment to state inventories at LIFO value (90.9) (117.3)
Net inventories $ 730.9 $ 782.0
4. Pension and other postretirement benefits
Net periodic benefit costs for pension and other postretirement benefits were as follows:
Pension Benefits Other Benefits Three Months Three Months Ended Ended March 31, March 31,
2003 2004 2003 2004
Service cost $ 8.3 $ 8.0 $ 3.6 $ 4.0 Interest cost 56.3 56.2 31.8 30.8 Expected return on assets (51.6) (51.1) (0.2) — Amortization of prior service cost 3.9 3.2 (3.9) (2.3) Amortization of loss 7.3 14.3 3.4 2.8 Settlement/curtailment — 5.5 — —
Net periodic benefit cost $ 24.2 $ 36.1 $34.7 $35.3
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The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provides a federal subsidy to sponsors of retiree healthcare benefit plans that include a qualified prescription drug benefit. The Company sponsors such a plan. Based on current temporary guidance, because its benefit plan’s measurement date preceded the effective date of the Act, the Company was not permitted to recognize the effects of the Act until February 8, 2004. The Company expects that savings in per capita prescription claim costs due to the impact of the Act will result in a reduction in the Company’s accumulated postretirement benefit obligation of approximately $140.0. These savings are included in unrecognized actuarial net gains and losses and will be recognized into income over future periods. In 2004, the Company expects to recognize a reduction in net periodic benefit costs related to these savings of approximately $17.0, excluding any possible fourth quarter corridor adjustment. Final authoritative guidance on accounting for the federal subsidy, when issued, could affect these estimates and require the Company to change previously reported information.
5. Common Stock Compensation
Common stock compensation expense related to restricted stock awards granted under the Company’s Stock Incentive Plan (“SIP”) was $1.5 and $2.0 for the three-month periods ended March 31, 2003 and 2004, respectively. The Company uses the intrinsic value method to account for nonqualified stock options granted under the SIP. Had compensation expense for the Company’s stock option plans been determined based on the fair value method, the Company’s net income (loss) and basic and diluted income (loss) per share would have been adjusted as follows:
Three Months Ended March 31,
2003 2004
Net income (loss) as reported $ (40.8) $ 165.4 Additional compensation cost based on fair value recognition, net of tax 0.4 0.4
Net income (loss) as adjusted $ (41.2) $ 165.0
Basic and diluted income (loss) per share as reported $ (0.38) $ 1.52 Additional compensation cost based on fair value recognition per share — —
Basic and diluted income (loss) per share as adjusted $ (0.38) $ 1.52
6. Discontinued Operations
On March 31, 2004, the Company sold Douglas Dynamics, L.L.C. for $264.0, before fees and expenses, and recognized a pre-tax gain of $208.3 ($174.9, after tax, or $1.61 per share) in the first quarter. On April 9, 2004, the Company sold Greens Port Industrial Park for $75.0, before fees and expenses, and expects to recognize a pre-tax gain of approximately $46.0 in the second quarter of 2004. Both businesses were accounted for as discontinued operations. Income from discontinued operations for the three months ended March 31, 2003 and 2004 included the following:
Douglas Dynamics Greens Port
2003 2004 2003 2004
Net sales $ 13.5 $ 22.7 $3.5 $3.1 Income before income taxes 0.4 6.2 2.2 2.1 Net income 0.2 5.2 1.4 1.7
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7. Comprehensive Income (Loss)
Comprehensive income (loss), net of tax, is as follows:
Three Months Ended March 31,
2003 2004
Net income (loss) $ (40.8) $ 165.4 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 0.9 0.7 Derivative instrument hedges, mark to market: Gains arising in period 5.0 1.9 Reclass of losses (gains) included in net loss (3.0) — Unrealized gains/losses on securities: Unrealized holding losses arising in period (1.3) — Reclass of gains included in net loss (0.2) — Minimum pension liability adjustment (0.4) 0.1
Comprehensive income (loss) $ (39.8) $ 168.1
A 40% deferred tax rate is applied to derivative instrument hedges and unrealized gains and losses.
Accumulated other comprehensive loss is as follows:
December 31, March 31, 2003 2004
Foreign currency translation $ 1.6 $ 2.3 Derivative instrument hedges 8.5 10.4 Unrealized losses on securities 0.4 0.4 Minimum pension liability (213.5) (213.4)
Accumulated other comprehensive loss $ (203.0) $ (200.3)
8. Legal Proceedings
The following are updates to the Company’s descriptions of pending legal proceedings and environmental matters reported in its Annual Report on Form 10-K for the calendar year 2003:
As previously reported, on January 2, 2002, John D. West, a former employee, filed a purported class action in the United States District Court for the Southern District of Ohio against the AK Steel Corporation Retirement Accumulation Pension Plan (the “AK RAPP”) and the AK Steel Corporation Benefit Plans Administrative Committee (the “AK BPAC”). The plaintiff claims that the method used under the AK RAPP to determine lump sum distributions does not comply with the Employment Retirement Income Security Act of 1974 (“ERISA”) and results in underpayment of benefits to putative class members. It previously was reported that the plaintiff had filed a motion to certify the case as a class action and that the parties have filed cross-motions for summary judgment on the merits of the plaintiff’s claims. On March 9, 2004, the Court granted the plaintiff’s motion to certify the case as a class action. On April 8, 2004, the Court granted the plaintiff’s motion for partial summary judgment and held that the manner in which the plaintiff’s lump sum disbursement was calculated under the AK RAPP violated ERISA and the Internal Revenue Code. The Court further denied the defendants’ motion for summary judgment and ordered that the matter proceed to trial on the issue of damages. No trial date has yet been set. The defendants intend to continue to contest this matter vigorously.
As previously reported, in April 2000 an action was filed in the United States District Court for the Southern District of Ohio by Bernard Fidel and others against the Company and certain of its directors and officers. The plaintiffs allege material misstatements and omissions in the Company’s public disclosure about its business and operations. It previously was reported that the parties have entered into a settlement agreement, which is subject to court approval. On March 30, 2004, the Court entered an Order preliminarily approving the settlement agreement and setting July 9, 2004 as the date for a final settlement hearing in the matter. The Company does not consider the amount of the settlement to be material and, in any event, the settlement amount is well within the limits of the Company’s applicable insurance.
As previously reported, on December 10, 2003, Richard M. Wardrop, Jr., the Company’s former chairman and CEO, filed an arbitration demand in which he asserted claims for benefits under a written severance agreement and under the Company’s Executive Minimum and Supplemental Retirement Plan as a result of the termination of his employment with the Company in September 2003. The total amount of his claims was in excess of $51.0. In April 2004, the Company and Mr. Wardrop reached a settlement of his claims which involved an agreed-upon payment of an amount significantly less than was claimed by Mr. Wardrop. The settlement involves a lump-sum pension payment that was paid entirely from a portion of the funds maintained in a “rabbi trust” account. The Company expects that the settlement will have no material impact on its earnings or liquidity. As part of the settlement, Mr. Wardrop’s arbitration proceeding has been terminated.
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As previously reported, the State of Ohio has asserted claims against the Company that air emissions from the operation of the blast furnace and basic oxygen furnace at the Company’s Middletown Works were causing a public nuisance. In June 2000, AK Steel filed a verified complaint against the State of Ohio and the Ohio Environmental Protection Agency (“OEPA”) in the Court of Common Pleas for Butler County, Ohio (the “State Action”) seeking a declaration, among other things, that the blast furnace and basic oxygen furnaces at the Middletown Works were not causing a public nuisance, and that AK Steel was in compliance with its operating permits for those facilities. It previously was reported that AK Steel and OEPA have been engaged in settlement discussions related to the OEPA air nuisance claims. On March 31, 2004, AK Steel and the OEPA executed and filed an agreed-upon Consent Order in the Court of Common Pleas for Butler County, Ohio (the “Consent Order”). A major component of the Consent Order is AK Steel’s commitment to install pollution control equipment at the Middletown Works blast furnace to meet MACT standards of the federal Clean Air Act by May 2005, one year in advance of the mandatory compliance date. AK Steel also agreed to implement a community response program, a neighborhood cleaning program and a green belt extension, to continue intra-plant employee busing and to pay a civil penalty of approximately $1.7, of which approximately $0.3 will be paid in the form of cash and the rest will be offset by credits for supplemental environmental projects. As a result of the Consent Order, all of the OEPA’s air nuisance claims relating to the Middletown Works blast furnace and basic oxygen furnaces have been resolved and the State Action has been dismissed. Certain appeals also previously reported in the Company’s Form 10-K related to the OEPA air nuisance claims are in the process of being dismissed.
9. New Accounting Pronouncement
In the quarter ended March 31, 2004, the Company adopted the revised FASB Interpretation No. 46, “Consolidation of Variable Interest Entities.” The revised interpretation requires the Company, under certain circumstances, to consolidate all variable interest entities. The adoption of the Interpretation did not have a material effect on the Company’s financial position, results of operations or cash flows.
10. Supplemental Guarantor Information
AK Holding, along with Douglas Dynamics, L.L.C., AK Tube LLC and AKS Investments, Inc. (the “Guarantor Subsidiaries”), fully and unconditionally, jointly and severally guarantee the payment of interest, principal and premium, if any, on AK Steel’s 9% Senior Notes Due 2007, 8 7/8% Senior Notes Due 2008, 7 7/8% Senior Notes Due 2009, 7 3/4% Senior Notes Due 2012 and Senior Secured Notes Due 2004. On March 31, 2004, Douglas Dynamics, L.L.C. was sold (see Note 6). AK Steel’s other subsidiaries are not guarantors of these notes. The Company has determined that full financial statements and other disclosures concerning AK Holding and the Guarantor Subsidiaries would not be material to investors and, accordingly, those financial statements are not presented. The following supplemental consolidating financial statements present information about AK Holding, AK Steel, the Guarantor Subsidiaries and AK Steel’s other subsidiaries.
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Statements of Operations For the Three Months Ended March 31, 2003
AK Guarantor Other Consolidated Holding AK Steel Subsidiaries Subsidiaries Eliminations Company
Net sales $ — $ 963.5 $ 22.1 $ 60.9 $ (61.2) $ 985.3
Cost of products sold — 898.4 17.1 19.2 (22.7) 912.0 Selling and administrative expenses 0.5 85.8 2.2 2.9 (31.9) 59.5 Depreciation — 56.2 0.7 — — 56.9
Total operating costs 0.5 1,040.4 20.0 22.1 (54.6) 1,028.4 Operating profit (loss) (0.5) (76.9) 2.1 38.8 (6.6) (43.1) Interest expense — 28.4 — 4.1 (3.9) 28.6 Other income (expense) — (4.9) — 2.7 3.4 1.2
Income (loss) before income taxes (0.5) (110.2) 2.1 37.4 0.7 (70.5) Income tax provision (benefit) — (28.4) — 0.3 — (28.1)
Income (loss) from continuing operations (0.5) (81.8) 2.1 37.1 0.7 (42.4) Income from discontinued operations — 1.4 0.2 — — 1.6
Net income (loss) $ (0.5) $ (80.4) $ 2.3 $ 37.1 $ 0.7 $ (40.8)
Statements of Operations For the Three Months Ended March 31, 2004
AK Guarantor Other Consolidated Holding AK Steel Subsidiaries Subsidiaries Eliminations Company
Net sales $ — $1,072.9 $ 62.3 $ 46.8 $ (47.6) $ 1,134.4
Cost of products sold — 971.5 52.6 26.8 (24.5) 1,026.4 Selling and administrative expenses 0.9 53.9 3.0 3.1 (8.4) 52.5 Depreciation — 52.3 1.7 — — 54.0
Total operating costs 0.9 1,077.7 57.3 29.9 (32.9) 1,132.9 Operating profit (loss) (0.9) (4.8) 5.0 16.9 (14.7) 1.5 Interest expense — 28.6 — 3.6 (2.5) 29.7 Other income (expense) — (5.4) 2.0 2.4 2.6 1.6
Income (loss) before income taxes (0.9) (38.8) 7.0 15.7 (9.6) (26.6) Income tax provision (benefit) — (10.7) — 0.5 — (10.2)
Income (loss) from continuing operations (0.9) (28.1) 7.0 15.2 (9.6) (16.4) Income from discontinued operations — 1.7 5.2 — — 6.9 Gain on sale of discontinued operations — 174.9 — — — 174.9
Net income (loss) $ (0.9) $ 148.5 $ 12.2 $ 15.2 $ (9.6) $ 165.4
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Condensed Balance Sheets As of December 31, 2003
AK Guarantor Other Consolidated Holding AK Steel Subsidiaries Subsidiaries Eliminations Company
ASSETS Current Assets: Cash and cash equivalents $ — $ 42.9 $ — $ 11.8 $ — $ 54.7 Accounts receivable — 23.2 24.8 351.3 — 399.3 Inventories — 676.3 17.6 45.1 (8.1) 730.9 Deferred tax asset — 98.4 — 0.6 — 99.0 Current assets held for sale — 1.3 45.2 — — 46.5 Other current assets 0.1 27.0 0.1 0.4 — 27.6
Total Current Assets 0.1 869.1 87.7 409.2 (8.1) 1,358.0
Property, Plant and Equipment 4,723.4 69.3 1.2 — 4,793.9 Less accumulated depreciation — (2,351.1) (8.3) (0.6) — (2,360.0)
Property, plant and equipment, net — 2,372.3 61.0 0.6 — 2,433.9
Other Assets: Investment in AFSG Holdings, Inc. — — 55.6 — — 55.6 Intercompany accounts 875.4 (780.9) 94.9 96.6 (286.0) — Other investments — 53.2 — 56.8 — 110.0 Goodwill — — 32.9 4.2 — 37.1 Other intangible assets — 78.9 1.4 — — 80.3 Deferred tax asset — 827.5 — — — 827.5 Non-current assets held for sale — 28.6 36.9 — — 65.5 Other assets — 52.2 — 5.5 — 57.7
TOTAL ASSETS $875.5 $ 3,500.9 $ 370.4 $ 572.9 $ (294.1) $ 5,025.6
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ 360.5 $ 4.2 $ 11.6 $ — $ 376.3 Accrued liabilities — 176.7 2.6 2.6 — 181.9 Discontinued operations liabilities — 0.9 15.9 — — 16.8 Current portion of long-term debt — 62.5 — — — 62.5 Current portion of pension and OPEB’s — 141.4 — — — 141.4
Total Current Liabilities — 742.0 22.7 14.2 — 778.9
Non-current Liabilities: Long-term debt — 1,197.8 — — — 1,197.8 Pension and OPEB’s — 2,939.9 0.7 — — 2,940.6 Discontinued operations liabilities — — 9.1 — — 9.1 Other liabilities — 149.6 — 2.4 — 152.0
Total Non-current Liabilities — 4,287.3 9.8 2.4 — 4,299.5
TOTAL LIABILITIES — 5,029.3 32.5 16.6 — 5,078.4
TOTAL STOCKHOLDERS’ EQUITY 875.5 (1,528.4) 337.9 556.3 (294.1) (52.8)
TOTAL LIABILITIES AND EQUITY $875.5 $ 3,500.9 $ 370.4 $ 572.9 $ (294.1) $ 5,025.6
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Condensed Balance Sheets As of March 31, 2004
AK Guarantor Other Consolidated Holding AK Steel Subsidiaries Subsidiaries Eliminations Company
ASSETS Current Assets: Cash and cash equivalents $ — $ 289.8 $ — $ 10.1 $ — $ 299.9 Accounts receivable — 51.2 29.1 397.9 — 478.2 Inventories — 725.3 15.2 38.5 3.0 782.0 Deferred tax asset — 108.1 — 0.6 — 108.7 Current assets held for sale — 1.7 — — — 1.7 Other current assets 0.1 27.0 0.5 1.3 — 28.9
Total Current Assets 0.1 1,203.1 44.8 448.4 3.0 1,699.4
Property, Plant and Equipment — 4,733.4 70.1 1.3 — 4,804.8 Less accumulated depreciation — (2,403.4) (10.1) (0.6) — (2,414.1)
Property, plant and equipment, net — 2,330.0 60.0 0.7 — 2,390.7
Other Assets: Investment in AFSG Holdings, Inc. — — 55.6 — — 55.6 Intercompany accounts 875.9 (925.5) 126.6 150.4 (227.4) — Other investments — 35.5 — 57.3 — 92.8 Goodwill — — 32.9 4.2 — 37.1 Other intangible assets — 78.9 1.3 — — 80.2 Deferred tax asset — 793.9 — — — 793.9 Non-current assets held for sale — 28.6 — — — 28.6 Other assets — 48.7 — 5.1 — 53.8
TOTAL ASSETS $876.0 $ 3,593.2 $ 321.2 $ 666.1 $ (224.4) $ 5,232.1
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Notes payable $ — $ — $ — $ 80.0 $ — $ 80.0 Accounts payable — 312.9 5.6 9.0 — 327.5 Accrued liabilities 0.3 195.9 3.1 4.2 — 203.5 Discontinued operations liabilities — 0.6 — — — 0.6 Current portion of long-term debt — 62.5 — — — 62.5 Current portion of pension and OPEB’s — 141.4 — — — 141.4
Total Current Liabilities 0.3 713.3 8.7 93.2 — 815.5
Non-current Liabilities: Long-term debt — 1,197.9 — — — 1,197.9 Pension and OPEB’s — 2,956.0 0.7 — — 2,956.7 Other liabilities — 143.1 — 2.5 — 145.6
Total Non-current Liabilities — 4,297.0 0.7 2.5 — 4,300.2
TOTAL LIABILITIES 0.3 5,010.3 9.4 95.7 — 5,115.7
TOTAL STOCKHOLDERS’ EQUITY 875.7 (1,417.1) 311.8 570.4 (224.4) 116.4
TOTAL LIABILITIES AND EQUITY $876.0 $ 3,593.2 $ 321.2 $ 666.1 $ (224.4) $ 5,232.1
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Condensed Statements of Cash Flows For the Three Months Ended March 31, 2003
AK AK Guarantor Other Consolidated Holding Steel Subsidiaries Subsidiaries Eliminations Company
Net cash flow from operating activities of continuing operations $ (0.3) $ (55.4) $ (0.4) $ 36.2 $ (1.9) $ (21.8)
Cash flows from investing activities: Capital investments — (14.4) (0.6) — — (15.0) Purchase of long-term investments — (0.9) — — — (0.9) Proceeds from sale of investments — 1.3 — — — 1.3 Other — — — (0.3) — (0.3)
Net cash flow from investing activities of continuing operations — (14.0) (0.6) (0.3) — (14.9)
Cash flows from financing activities: Purchase of treasury stock (0.5) — — — — (0.5) Intercompany activity 0.8 33.0 (1.2) (34.5) 1.9 — Other — — — 0.9 — 0.9
Net cash flow from financing activities of continuing operations 0.3 33.0 (1.2) (33.6) 1.9 0.4
Cash flow from discontinued operations — 0.8 2.2 — — 3.0
Net increase (decrease) — (35.6) — 2.3 — (33.3)
Cash and equivalents, beginning of period — 276.0 — 6.5 — 282.5
Cash and equivalents, end of period $ — $240.4 $ — $ 8.8 $ — $ 249.2
Condensed Statements of Cash Flows For the Three Months Ended March 31, 2004
AK AK Guarantor Other Consolidated Holding Steel Subsidiaries Subsidiaries Eliminations Company
Net cash flow from operating activities of continuing operations $ (0.4) $ (79.9) $ 8.4 $ (26.5) $ (20.7) $ (119.1)
Cash flows from investing activities: Capital investments — (10.1) (0.7) — — (10.8) Proceeds from sale of business — 263.9 — — — 263.9 Proceeds from sale of investments — 18.8 — — — 18.8 Other — 0.1 — (0.2) — (0.1)
Net cash flow from investing activities of continuing operations — 272.7 (0.7) (0.2) — 271.8
Cash flows from financing activities: Proceeds from issuing notes payable — — — 80.0 — 80.0 Purchase of treasury stock (0.2) — — — — (0.2) Dividends paid — — (2.0) (2.0) 4.0 — Intercompany activity 0.6 53.5 (17.1) (53.7) 16.7 — Other — (0.8) — 0.7 — (0.1)
Net cash flow from financing activities of continuing operations 0.4 52.7 (19.1) 25.0 20.7 79.7
Cash flow from discontinued operations — 1.4 11.4 — — 12.8
Net increase (decrease) — 246.9 — (1.7) — 245.2
Cash and equivalents, beginning of period — 42.9 — 11.8 — 54.7
Cash and equivalents, end of period $ — $289.8 $ — $ 10.1 $ — $ 299.9
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and per ton data)
Results of Operations
AK Steel’s operations consist of seven steelmaking and finishing plants that produce flat-rolled carbon steels, including premium quality coated, cold-rolled and hot-rolled products, and specialty stainless and electrical steels that are sold in slab, hot band, sheet and strip forms. Its operations also include AK Tube LLC, which further finishes flat-rolled steel into welded steel tubing, and European trading companies that buy and sell steel and steel products.
Steel shipments for the three months ended March 31, 2004 and 2003 were 1,514,300 tons and 1,365,400 tons, respectively. The 11% increase in tons shipped in the current year first quarter was primarily a result of strong demand from customers in the automotive, appliance, construction and manufacturing markets. For the three months ended March 31, 2004, value-added products comprised 93.7% of total shipments, up from 89.1% reported in the first three months of 2003 on significantly stronger shipments of coated and cold-rolled carbon steel products and a doubling of tubular steel product shipments as the result of the acquisition of ArvinMeritor’s tubing facility in the third quarter of 2003.
For the Three Months Ended March 31,
(tons in thousands) 2003 2004
Stainless/electrical 226.7 16.6% 239.6 15.8% Coated 687.3 50.3% 809.6 53.5% Cold-rolled 278.2 20.4% 316.3 20.9% Tubular 24.8 1.8% 52.6 3.5%
Subtotal value-added shipments 1,217.0 89.1% 1,418.1 93.7%
Hot-rolled 85.3 6.2% 47.3 3.1% Secondary 63.1 4.7% 48.9 3.2%
Total shipments 1,365.4 100.0% 1,514.3 100.0%
For the quarter ended March 31, 2004, net sales were $1,134.4, a 15% increase from the $985.3 reported for the corresponding period in 2003. Net sales increased due to higher shipment volumes, improved product mix and higher prices across all product lines. The Company’s average steel selling price increased from $702 per ton in the first three months of 2003 to $747 per ton in the first three months of 2004 due to price increases, and the implementation of raw material and energy cost surcharges, both primarily on sales in the spot market. The price increases reflect the global increase in demand for steel, while the surcharges were imposed in response to unprecedented increases in the costs of energy, particularly natural gas, and certain key raw materials, including steel scrap, purchased carbon slabs, coal and coke.
For the first quarter of 2004, the Company recorded an operating profit of $1.5 compared to a $43.1 operating loss for the first quarter of 2003. The year-over- year improvement resulted from increased sales and lower operating and overhead costs that reflected the benefits of salaried workforce reductions and other cost containment efforts. However, in the three months ended March 31, 2004 and 2003, LIFO charges of $26.4 and $13.5, respectively, reflected continued increasing costs for key raw materials and energy, as well as higher employee benefit costs. The 2003 operating loss also included a charge of $3.0 for an unplanned blast furnace outage.
On March 31, 2004, the Company sold Douglas Dynamics, L.L.C. for $264.0, before fees and expenses, and recognized a pre-tax gain of $208.3 ($174.9, after tax, or $1.61 per share) in the first quarter. On April 9, 2004, the Company sold Greens Port Industrial Park for $75.0, before fees and expenses, and expects to recognize a pre-tax gain of approximately $46.0 in the second quarter of 2004. Both businesses were accounted for as discontinued operations and together generated after-tax income of $6.9 and $1.6 during the first quarter of 2004 and 2003, respectively.
During the first quarter of 2003, the effective income tax rate on loss from continuing operations and income from discontinued operations approximated federal and state statutory rates. In the first quarter of 2004, the effective tax rate applied to the loss from continuing operations, likewise, approximates statutory rates. However, an effective rate of approximately 16% was applied to the operating income of discontinued operations and the gain on the sale of Douglas Dynamics. This lower rate results from the recognition of a benefit the Company estimates it will realize in 2004 from the use of net operating loss carryovers that had previously been reduced by a deferred tax asset valuation allowance. The actual effective tax rate applied to discontinued operations for the year 2004 will depend on the amount of taxable income or loss generated by the Company in the year.
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The Company’s net income in the three months ended March 31, 2004 was $165.4, or $1.52 per share, compared to a net loss of $40.8, or $0.38 per share, in the first quarter of 2003. The 2004 favorable variance was primarily due to the gain on the sale of Douglas Dynamics and improved operating results from the steel operations.
Outlook
The Company expects second quarter 2004 shipments to approximate first quarter levels, with continued robust shipments to automotive customers and improving demand for stainless and electrical steels. The percentage of value-added products to total shipments is expected to approximate the 94% experienced in the first quarter. Strong spot market pricing should continue due to previously announced increases in base prices and surcharges with overall average selling prices expected to rise approximately 8% from the first quarter.
The Company expects second quarter costs to increase, as significantly higher purchased slab prices and slightly higher natural gas and iron ore prices outstrip additional savings from cost containment measures. In addition, although steel scrap prices recently have begun to decline from March 2004 highs, scrap costs recognized in cost of products sold during the second quarter are expected to be higher than in the first quarter. A planned maintenance outage at the Ashland Works blast furnace in the second quarter is expected to negatively impact operating results by approximately $16.0. Overall, the Company expects modestly improved operating results in the second quarter as compared to the first quarter of 2004.
As described below, net proceeds from the sales of Douglas Dynamics and Greens Port Industrial Park will be used primarily to reduce outstanding debt and reinvest in the business. The Company expects to record a second quarter pre-tax charge of approximately $3.0 related to the redemption of its Senior Secured Notes.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provides a federal subsidy to sponsors of retiree healthcare benefit plans that include a qualified prescription drug benefit. The Company sponsors such a plan. Based on current temporary guidance, because its benefit plan’s measurement date preceded the effective date of the Act, the Company was not permitted to recognize the effects of the Act until February 8, 2004. The Company expects that savings in per capita prescription claim costs due to the impact of the Act will result in a reduction in the Company’s accumulated postretirement benefit obligation of approximately $140.0. These savings are included in unrecognized actuarial net gains and losses and will be recognized into income over future periods. In 2004, the Company expects to recognize a reduction in net periodic benefit costs related to these savings of approximately $17.0, excluding any possible fourth quarter corridor adjustment. Final authoritative guidance on accounting for the federal subsidy, when issued, could affect these estimates and require the Company to change previously reported information.
Liquidity and Capital Resources
At March 31, 2004, the Company had $299.9 of cash and cash equivalents, $127.2 of availability under a $300.0 accounts receivable purchase credit facility and $308.8 of availability under a $400.0 inventory credit facility. At March 31, 2004, there were no outstanding borrowings under the inventory facility; however, the Company had outstanding borrowings of $80.0 under the accounts receivable facility. Total availability under these facilities was also reduced by $90.8 of outstanding letters of credit and reduced pools of eligible collateral. Availability under each facility fluctuates monthly with changes in the levels of eligible receivables and inventories. The Company believes it has adequate liquidity to meet its anticipated cash needs for capital investments, working capital, employee benefit obligations, debt service and the funding of operations.
Cash used by operations totaled $119.1 for the three months ended March 31, 2004. Net cash generated by the Company’s operations was more than offset by $162.3 of cash used to increase net working capital. Accounts receivable rose as a result of increased sales, while inventories grew due to the impact of rising costs and increases in purchased slabs in anticipation of a second quarter blast furnace outage. Accounts payable decreased due to more rapid payment for certain raw materials that have been subject to sharply increasing demand.
During the three months ended March 31, 2004, cash generated by investing activities totaled $271.8, including $263.9 from the sale of Douglas Dynamics. In the first three months of 2004, the Company used $10.8 for capital investments. Capital spending for the year 2004 is expected to total approximately $125.0.
During the three months ended March 31, 2004, cash flows from financing activities generated $79.7, primarily from utilization of the accounts receivable credit facility.
The sales of Douglas Dynamics in March 2004 and Greens Port Industrial Park in early April 2004 generated aggregate proceeds, net of fees and expenses, of approximately $334.0. A portion of these proceeds are being used in the second quarter to reduce outstanding debt, including the April repayment of the $80.0 outstanding balance under the accounts receivable facility and the early redemption in May of the remaining $62.5 of the Company’s
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Senior Secured Notes due December 2004. The Company also will use part of the proceeds to fund future capital investments.
Following redemption of the Senior Secured Notes, the Company will have no scheduled debt maturities before 2007. In addition, the Pension Funding Equity Act of 2004 was signed into law in early April 2004. This legislation reduces the Company’s funding obligations during the next two years by increasing the discount rate used to value pension plans and deferring deficit reduction contributions. The Company was under no obligation to fund its pension trusts in 2004 and expects that, as a result of the newly enacted legislation, it will have no pension funding obligation in 2005. Annual pension funding obligation amounts after 2005 will depend on pension plan investment performance, interest rates and other factors, and could be substantial.
Forward-Looking Statements
Certain statements in this Form 10-Q, particularly those in the paragraph entitled “Outlook,” reflect management’s estimates and beliefs and are intended to be, and are hereby identified as “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. As discussed in its Form 10-K for the year ended December 31, 2003, 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.
Item 4. Controls and Procedures
With the participation of management, the Company’s chief executive officer and its chief financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2004. Based upon this evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective as of March 31, 2004.
There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended March 31, 2004, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The following are updates to the Company’s descriptions of pending legal proceedings reported in its Annual Report on Form 10-K for the calendar year 2003:
As previously reported, on January 2, 2002 John D. West, a former employee, filed a purported class action in the United States District Court for the Southern District of Ohio against the AK Steel Corporation Retirement Accumulation Pension Plan (the “AK RAPP”) and the AK Steel Corporation Benefit Plans Administrative Committee (the “AK BPAC”). The plaintiff claims that the method used under the AK RAPP to determine lump sum distributions does not comply with the Employment Retirement Income Security Act of 1974 (“ERISA”) and results in underpayment of benefits to putative class members. It previously was reported that the plaintiff had filed a motion to certify the case as a class action and that the parties have filed cross-motions for summary judgment on the merits of the plaintiff’s claims. On March 9, 2004, the Court granted the plaintiff’s motion to certify the case as a class action. On April 8, 2004, the Court granted the plaintiff’s motion for partial summary judgment and held that the manner in which the plaintiff’s lump sum disbursement was calculated under the AK RAPP violated ERISA and the Internal Revenue Code. The Court further denied the defendants’ motion for summary judgment and ordered that the matter proceed to trial on the issue of damages. No trial date has yet been set. The defendants intend to continue to contest this matter vigorously.
As previously reported, in April 2000 an action was filed in the United States District Court for the Southern District of Ohio by Bernard Fidel and others against the Company and certain of its directors and officers. The plaintiffs allege material misstatements and omissions in the Company’s public disclosure about its business and operations. It previously was reported that the parties have entered into a settlement agreement, which is subject to court approval. On March 30, 2004, the Court entered an Order preliminarily approving the settlement agreement and setting July 9, 2004 as the date for a final settlement hearing in the matter. The Company does not consider the amount of the settlement to be material and, in any event, the settlement amount is well within the limits of the Company’s applicable insurance.
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As previously reported, on December 10, 2003, Richard M. Wardrop, Jr., the Company’s former chairman and CEO, filed an arbitration demand in which he asserted claims for benefits under a written severance agreement and under the Company’s Executive Minimum and Supplemental Retirement Plan as a result of the termination of his employment with the Company in September 2003. The total amount of his claims was in excess of $51.0. In April 2004, the Company and Mr. Wardrop reached a settlement of his claims which involved an agreed-upon payment of an amount significantly less than was claimed by Mr. Wardrop. The settlement involves a lump-sum pension payment that was paid entirely from a portion of the funds maintained in a “rabbi trust” account. The Company expects that the settlement will have no material impact on its earnings or liquidity. As part of the settlement, Mr. Wardrop’s arbitration proceeding has been terminated.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Issuer Purchases of Equity Securities
Approximate Dollar Total Number of Value of Shares Shares Purchased that May Yet be Total Number Average Price as Part of Publicly Purchased Under of Shares Paid Per Announced Plans the Plans or Period Purchased Share or Programs Programs
January 1 through 31, 2004 22,157 $ 4.90 0 February 1 through 29, 2004 12,278 $ 4.66 0 March 1 through 31, 2004 810 $ 5.25 0
Total 35,245 $ 4.82 0 $ 59.5
During the quarter, the Company repurchased shares of common stock owned by participants in its restricted stock awards program under the terms of its Stock Incentive Plan. In order to satisfy the requirement that an amount be withheld that is sufficient to pay federal, state and local taxes due upon the vesting of the restricted stock, employees are permitted to have the Company withhold shares having a fair market value equal to the tax which could be imposed on the transaction. The Company repurchases the withheld shares at the quoted average of high and low prices on the day the participant elects to have the shares withheld.
On April 25, 2000, the Company announced that its Board of Directors had authorized the Company to repurchase, from time to time, up to $100.0 of its outstanding equity securities. The Company has not repurchased its stock under this program since the third quarter of 2000 and cannot currently reacquire its stock under a covenant contained in the instruments governing its outstanding senior debt.
Item 5. Other Information
The following are updates to the Company’s descriptions of pending environmental matters reported in its Annual Report on Form 10-K for the calendar year 2003:
As previously reported, the State of Ohio has asserted claims against the Company that air emissions from the operation of the blast furnace and basic oxygen furnace at the Company’s Middletown Works were causing a public nuisance. In June 2000, AK Steel filed a verified complaint against the State of Ohio and the Ohio Environmental Protection Agency (“OEPA”) in the Court of Common Pleas for Butler County, Ohio (the “State Action”) seeking a declaration, among other things, that the blast furnace and basic oxygen furnaces at the Middletown Works were not causing a public nuisance, and that AK Steel was in compliance with its operating permits for those facilities. It previously was reported that AK Steel and OEPA have been engaged in settlement discussions related to the OEPA air nuisance claims. On March 31, 2004, AK Steel and the OEPA executed and filed an agreed-upon Consent Order in the Court of Common Pleas for Butler County, Ohio (the “Consent Order”). A major component of the Consent Order is AK Steel’s commitment to install pollution control equipment at the Middletown Works blast furnace to meet MACT standards of the federal Clean Air Act by May 2005, one year in advance of the mandatory compliance date. AK Steel also agreed to implement a community response program, a neighborhood cleaning program and a green belt extension, to continue intra-plant employee busing and to pay a civil penalty of approximately $1.7, of which approximately $0.3 will be paid in the form of cash and the rest will be offset by credits for supplemental environmental projects. As a result of the Consent Order, all of the OEPA’s air nuisance claims relating to the Middletown Works blast furnace and basic oxygen furnaces have been resolved and the State Action has been dismissed. Certain appeals also previously reported in the Company’s Form 10-K related to the OEPA air nuisance claims are in the process of being dismissed.
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Item 6. Exhibits and Reports on Form 8-K
A. Exhibits.
Exhibit 10.1 Executive Minimum and Supplemental Retirement Plan amended and restated November 25, 2003 (as corrected and superseded on March 4, 2004) Exhibit 31.1. Section 302 Certification of Chief Executive Officer Exhibit 31.2. Section 302 Certification of Chief Financial Officer Exhibit 32.1. Section 906 Certification of Chief Executive Officer Exhibit 32.2. Section 906 Certification of Chief Financial Officer
B. Reports on Form 8-K.
The following reports on Form 8-K were filed in the quarter ended March 31, 2004 to disclose information pursuant to Item 5:
Item Reported Date
Shirley D. Peterson elected to the Board of Directors January 16, 2004 Agreement for sale of Greens Port Industrial Park signed February 13, 2004 Agreement for sale of Douglas Dynamics, L.L.C. signed March 1, 2004
The following reports on Form 8-K were filed in the quarter ended March 31, 2004 to furnish information pursuant to Item 9:
Item Reported Date
Supplemental Forward-Looking Information January 30, 2004
The following reports on Form 8-K were filed in the quarter ended March 31, 2004 to furnish information pursuant to Item 12:
Item Reported Date
Fourth Quarter and Full Year Financial Results January 30, 2004
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf of the registrant by the following duly authorized person.
AK Steel Holding Corporation (Registrant)
Date May 4, 2004 /s/ ALBERT E. FERRARA, JR.
Albert E. Ferrara, Jr. Vice President, Finance and Chief Financial Officer (and principal accounting officer)
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AK STEEL CORPORATION
EXECUTIVE MINIMUM AND SUPPLEMENTAL RETIREMENT PLAN
(as amended and restated as of November 25, 2003)
AK STEEL CORPORATION EXECUTIVE MINIMUM AND SUPPLEMENTAL RETIREMENT PLAN
(as amended and restated as of November 25, 2003)
ARTICLE 1: INTRODUCTION AND PURPOSE
AK Steel Corporation hereby amends and restates the AK Steel Corporation Executive Minimum and Supplemental Retirement Plan (“Plan”), effective as of November 25, 2003. The Plan was last amended and restated as of January 20, 2000. The purpose of the Plan is to aid the Company and its subsidiaries and affiliates in attracting and retaining key personnel.
The Plan is an unfunded deferred compensation arrangement maintained by the Company for the purpose of providing supplemental retirement benefits for a select group of management or highly compensated employees within the meaning of Section 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974, as amended. Any obligations under the Plan shall be the joint and several obligations of AK Steel Holding Corporation, the Company and each of their respective subsidiaries and affiliates.
ARTICLE 2: DEFINITIONS
As used in the Plan, the following terms, when capitalized, shall have the following meanings, except when otherwise indicated by the context:
2.1 “Administrator” means the Compensation Committee of the Board, or any successor Committee duly empowered by the Board.
2.2 “Average Monthly Earnings” means a Member’s average monthly earnings during the highest three (3) calculation years of the last ten (10) calculation years. For this purpose, earnings includes all compensation for services rendered, including base salary and any bonus under the AK Steel Corporation Annual Management Incentive Plan and any substitute or successor of such plan (“MIP”), provided however, if during any calculation year, a Member receives more than one bonus under the MIP, only such bonus of the highest amount shall be taken into account in that calculation year. Earnings shall also include any elective deferrals of base salary or any bonus under the MIP made with respect to any calendar year under the AK Steel Corporation Thrift Plan, the AK Steel Corporation Executive Deferred Compensation Plan, or under any plan established under section 125 of the Code. Compensation attributable to reimbursement of business or relocation expenses; Company contributions after 1991 to any Company-sponsored employee benefit plans established under sections 401(k) or 125 of the Code; any bonuses under the AK Steel Corporation Long-Term Performance Plan and any substitute or successor of such plan; and income under any stock option, restricted stock or phantom stock plan, shall be disregarded. The term “calculation years” means fiscal years measured by the twelve (12) consecutive calendar months ending with the last day of the month coincident with or immediately preceding the date of a Member’s Termination Date.
1 2.3 “Benefit” means the amount determined under Article 6 of the Plan, or under Article 6 of the Prior Plan where indicated by the context.
2.4 “Board” means the Board of Directors of AK Steel Holding Corporation or any successor thereto, as the same shall be constituted from time to time.
2.5 “Chairman” means the Chairman of the Board.
2.6 “Change of Control” has the same meaning under this Plan as under the Trust Agreement for the AK Steel Corporation Non-Qualified Supplemental Retirement Plans.
2.7 “Code” means the Internal Revenue Code of 1986, as amended.
2.8 “Company” means AK Steel Corporation and any successor to all or substantially all of the assets or business of AK Steel Corporation.
2.9 “Effective Date” means November 25, 2003.
2.10 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.11 “Grandfathered Average Monthly Earnings” means, with respect to any Member as of the Effective Date whose Vesting Date has not occurred prior to the Effective Date, the greater of:
(a) his Average Monthly Earnings as determined under Section 2.2 with respect to all calculation years; or
(b) his Average Monthly Earnings under the Prior Plan determined immediately before the Effective Date, times the lesser of:
(1) the percentage obtained by dividing his Service as of the Effective Date by 10; or
(2) the percentage obtained by dividing his Officer Service as of the Effective Date by 5.
2.12 “Grandfathered Benefit” means, with respect to any Member whose Vesting Date occurred prior to the Effective Date, his Benefit under the Prior Plan determined immediately before the Effective Date.
2.13 “Key Management Member” means any key manager of the Company who was a Member as defined under the terms of the Prior Plan.
2.14 “Key Management Service” means a Key Management Member’s service as a key manager of the Company as identified by the Chairman and approved by the Administrator.
2 2.15 “Member” means any elected officer of the Company who is selected by the Chairman and who is approved by the Administrator to be a participant eligible for benefits under this Plan. The term “Member” as used in Articles 8 and 9 shall also include “Key Management Member” as indicated by the context.
2.16 “NCPP” means the AK Steel Corporation Noncontributory Pension Plan as amended (excluding the RAPP component of such plan), and any predecessor, substitute or successor Qualified DB Plan.
2.17 “Officer Service” means a Member’s Service as an elected officer of the Company.
2.18 “Prior Plan” means the AK Steel Corporation Executive Minimum and Supplemental Retirement Plan as in effect immediately prior to the Effective Date.
2.19 “Qualified DB Plan” means any tax-qualified defined benefit pension plan in which a Member has an accrued benefit as of his or her Termination Date including the NCPP and the RAPP, or any other tax-qualified defined benefit pension plan sponsored by the Company or by any previous employer of any Member.
2.20 “Qualified DC Plan” means any tax-qualified defined contribution plan offered instead of a Qualified DB Plan as determined by the Administrator. For purposes of this definition, however, the AK Steel Corporation Thrift Plan A and any predecessor, substitute or successor thrift plan shall not be deemed to be a Qualified DC Plan.
2.21 “Qualified Plan” means any Qualified DB Plan and any Qualified DC Plan.
2.22 “RAPP” means the AK Steel Corporation Retirement Accumulation Pension Plan, a component plan of the NCPP.
2.23 “Service” means years of employment with the Company, including years of employment with Armco Steel Company, L.P. or Armco Inc. and including years of employment with any other predecessor organization approved by the Administrator.
2.24 “Spouse” means the person to whom a Member is married at the time payment of the Member’s Benefit is to commence under the Plan.
2.25 “Termination Date” means the date a Member’s employment with the Company terminates for any reason, including death, on or after the Member’s Vesting Date.
2.26 “Trust” means the Trust Agreement for the AK Steel Corporation Non-Qualified Supplemental Retirement Plans, as amended, and any successor or replacement trust for such trust.
3 2.27 “Unlimited NCPP Benefit” means for any Member who, as of his Termination Date, is entitled to a vested accrued benefit under the NCPP, the Member’s vested accrued benefit under the NCPP, determined without regard to the limitations under sections 401(a)(17) and 415 of the Code (or any substitute or similar provision limiting benefits permitted under the NCPP) and based upon his earnings used for purposes of determining Average Monthly Earnings under Section 2.2.
2.28 “Vesting Date” means the earliest of:
(a) the date on which a Member completes both ten (10) years of Service and five (5) years of Officer Service, or with respect to a Key Management Member, the date on which the Key Management Member completes both ten (10) years of Service and five (5) years of Key Management Service;
(b) the date of a Member’s or Key Management Member’s death provided he has completed at least five (5) years of Service as of his date of death;
(c) the effective date of a Change of Control; or
(d) such other date as determined by the Administrator in its sole discretion.
ARTICLE 3: ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Administrator or its delegate as the Administrator may designate from time to time. Except as otherwise provided herein, it is intended that the Administrator (or such delegate) shall have full discretion to interpret the Plan’s terms and to resolve claims which may arise under the Plan.
ARTICLE 4: SOURCE OF BENEFITS
4.1 Source of Benefits
The Company may pay benefits due under the terms of this Plan directly from its assets or from assets held in the Trust. All assets held by the Trust shall at all times be assets of the Company. The benefits payable under this Plan shall be unfunded for all purposes of the Code and ERISA.
4.2 Assets of the Company
Nothing contained in this Plan shall give or be deemed to give any Member or any other person any interest in any property of the Trust or of the Company or any right except to receive such payments as are expressly provided hereunder.
4 4.3 Liability of Officers and Directors
No current or former employee, officer or director of AK Steel Holding Corporation or the Company shall be personally liable to any Member or other person under any provision of this Plan.
4.4 Funding upon Change of Control
In the event of a Change of Control, the Company shall fully fund all benefits then accrued under this Plan by delivering sufficient assets to the trustee of the Trust in cash or in kind. Such funding obligation may be secured by an irrevocable letter of credit issued to the trustee of the Trust by such bank or other lending institution as approved by the Administrator.
ARTICLE 5: ELIGIBILITY AND PARTICIPATION
5.1 Participation
(a) Except to the extent that Key Management Members may be entitled to a Benefit under this Plan due to their participation in the Prior Plan, participation in this Plan shall be limited to elected officers of the Company who have been selected by the Chief Executive Officer and approved from time to time by the Administrator. Participation shall commence at such time as the Administrator determines after the selected
officer enters into any agreements with the Company as the Administrator may require as a condition to participation in this Plan, and provides to the Administrator any documents or other information required by the Administrator, including but not limited to information relating to the officer’s participation in any Qualified Plan.
(b) Elected officers of the Company who were Members under the Prior Plan, and attained their Vesting Date before the Effective Date, shall be
Members under this Plan as of the Effective Date.
(c) Elected officers of the Company who were Members under the Prior Plan and had not attained their Vesting Date before the Effective Date, shall
be eligible for participation in this Plan only if again selected by the Chief Executive Officer and approved by the Administrator.
5.2 Removal
The Board may remove any Member or Key Management Member from participation in this Plan. With respect to any removed Member or Key Management Member who has attained his Vesting Date, such removal shall not directly or indirectly deprive such Member or Key Management Member of all or any portion of his Benefit or any right to receive his Benefit under the terms of the Plan as in effect immediately before such removal.
5 5.3 Notification
The Company shall notify in writing those employees selected as Members pursuant to Section 5.1 of their Member status and shall notify in writing any Member or Key Management Member removed from membership pursuant to Section 5.2.
ARTICLE 6: BENEFITS
6.1 Benefit Defined
(a) A Member’s accrued benefit under this Plan is the Member’s Regular Benefit as defined in Section 6.2, reduced as provided in Section 6.4. No
Benefit shall be payable under this Plan if a Member’s employment with the Company terminates for any reason prior to his Vesting Date.
(b) With respect to a Key Management Member who attained his Vesting Date under the Prior Plan before the Effective Date, his accrued benefit under this Plan shall be his Benefit under the terms of the Prior Plan (after offset for other pensions as provided therein) determined immediately before the Effective Date. With respect to a Key Management Member who has not attained his Vesting Date under the Prior Plan before the Effective Date, his accrued benefit under this Plan shall be his Regular Benefit under the terms of the Prior Plan (after offset for other pensions as provided therein) determined immediately before the Effective Date, times the lesser of:
(1) the percentage obtained by dividing his Service as of the Effective Date by 10; or
(2) the percentage obtained by dividing his Key Management Service as of the Effective Date by 5.
The Benefit of any Key Management Member as determined above shall not increase after the Effective Date, and shall not be payable under this Plan if such Key Management Member’s employment with the Company terminates for any reason prior to his Vesting Date.
6.2 Regular Benefit
(a) Except as provided in (b) below, a Member’s Regular Benefit is a monthly payment for the Member’s lifetime, commencing on the first day of the month coinciding with or next following the later of the Member’s 60th birthday or the Member’s Termination Date and payable in the form provided in Section 7.1, which is in an amount equal to the greater of:
(1) in the case of a Member hired by the Company prior to January 1, 1992, his Unlimited NCPP Benefit; or
6 (2) except as otherwise provided in any other agreement between the Company and a Member and approved by the Administrator, 50% of
the greater of the Member’s Average Monthly Earnings or his Grandfathered Average Monthly Earnings.
(b) With respect to any Member whose Vesting Date occurred prior to the Effective Date, his Regular Benefit shall be the greater of his
Grandfathered Benefit or the amount determined in (a) above.
6.3 Early Retirement Benefit
Any Member (or Key Management Member) whose employment with the Company terminates after he has attained his Vesting Date, may elect, as soon as administratively feasible after his Termination Date, to commence payment of his Benefit on the first day of the month coinciding with or next following his 55th birthday (or such earlier date as may be approved by the Administrator in its sole discretion). Such Early Retirement Benefit shall be equal to his Regular Benefit provided in Section 6.2 (or, in the case of a Key Management Member, his Benefit under Section 6.1(b)) reduced to its actuarial equivalent based on his age as of such elected commencement date and on the actuarial assumptions used by the enrolled actuary for the NCPP to determine a participant’s early retirement benefit under the NCPP.
6.4 Offset for Other Pensions
A Member’s Benefit shall be reduced as of the Member’s Termination Date by: (a) any accrued benefit under any employer-provided Qualified DB Plan, actuarially adjusted as if the benefit under the Qualified DB Plan commenced at the same time as the Member’s Benefit; or (b) the actuarial equivalent of any employer-provided vested benefits accumulated under any Qualified DC Plan.
6.5 Non-Duplication
A Member shall not be eligible for benefits under any other non-qualified supplemental retirement benefit plan maintained by the Company for the purpose of providing benefits not permitted to be paid under any Qualified DB Plan. Nothing herein shall prohibit participation by any Member in the AK Steel Corporation Executive Deferred Compensation Plan or the AK Steel Corporation Supplemental Thrift Plan.
7 ARTICLE 7: PAYMENT
7.1 Payment of Benefits
(a) Except as provided in (b) below, the basic form of payment of a Member’s Benefit shall be a single life annuity payable in equal monthly installments commencing as of the applicable date specified in Section 6.2 or 6.3 and continuing until payment of the installment due on the first of the month in which the Member dies. A lump sum form of payment may be available if approved by the Administrator in its sole discretion. In the case of a Member who is married when payment of his Benefit is to commence, unless the Member’s Spouse consents in writing
to the Member’s election of the single life annuity (or the lump sum form of payment, if available), the automatic form of payment of his Benefit shall be a joint and 50% surviving spouse annuity which shall be the actuarial equivalent of the basic form single life annuity, and which provides a lifetime benefit for the Member and a lifetime benefit for his Spouse equal to 50% of the benefit payable to the Member. The monthly amount of any annuity shall be determined by the enrolled actuary for the NCPP based on the actuarial assumptions contained in the NCPP.
(b) With respect to any Member whose Vesting Date occurred prior to the Effective Date, an amount equal to his Grandfathered Benefit shall be paid in a single lump sum payment, and any balance of his Benefit shall be paid in accordance with (a) above; provided however, such Member may elect the same form of payment with respect to his entire Benefit in accordance with (a) above, subject to approval by the Administrator.
(c) Any lump sum payment to a Member shall be determined in accordance with Section 7.2, and shall be made to the Member, or in the case of the Member’s death, to the Member’s designated beneficiary, within 30 days following the Member’s Termination Date. Any designation of beneficiary shall be made by the Member on an election form filed with the administrator and may be changed by the Member at any time by filing another election form containing the revised instructions. If no beneficiary is designated or no designated beneficiary survives the Member, payment shall be made to the Member’s estate.
(d) A Key Management Member’s Benefit shall be paid in accordance with the terms of the Prior Plan, provided however, with respect to any Key Management Member who has not attained his Vesting Date under the Prior Plan as of the Effective Date, his Benefit shall be paid in the manner set forth in (a) above.
7.2 Lump-Sum Valuation
(a) The lump-sum present value of a Member’s Benefit shall be the actuarial equivalent of his Benefit payable as a single life annuity as set forth in
Section 7.1(a).
8 (b) Subject to the provisions of (c) below, the lump-sum present value of a Member’s Benefit shall be determined by the enrolled actuary for the NCPP based upon assumptions approved by the Administrator in its sole discretion. The assumptions may be changed at any time, and from time to time, but any change shall be valid only with respect to Termination Dates occurring twelve or more months after the change is approved.
(c) Unless otherwise directed by the Administrator, the lump-sum present value of a Member’s Benefit shall be calculated as of the Member’s Termination Date based upon : (i) the 60-month average of the Pension Benefit Guaranty Corporation immediate annuity interest rate in effect during each of the 60 months preceding the month in which the Termination Date occurs, (ii) the age of the Member, (iii) the 1984 Unisex Pension Table (UP84) and (iv) such other actuarial assumptions as would apply under the NCPP. The lump sum present value of any Grandfathered Benefit shall be determined under the applicable provisions of the Prior Plan.
ARTICLE 8: INTERPRETATION, AMENDMENT AND TERMINATION
8.1 Interpretation of the Plan
This document contains the terms of the Plan. However, the Administrator shall have, and the Board expressly reserves to itself and its designate, the broadest possible power to exercise its discretion to interpret the terms of this Plan and to resolve any question regarding any person’s rights under the Plan. Any such interpretation shall be final and binding upon a Member, the Member’s spouse and heirs and subject to review only in accordance with Section 8.2.
8.2 Claims Procedure
Any Member or other person questioning the rights of any person under the Plan shall submit such question in writing to the Administrator, or its designate, for resolution. No person shall have any claim or cause of action for any benefit under this Plan until the Administrator, or its designate, has responded to such written claim, which response shall not be unreasonably delayed. Except as to disputes described in Sections 9.2 and 9.4, it is the intent of the Company, and each Member agrees as a condition of membership, that any judicial review of any decision hereunder shall be limited to a determination of whether the Administrator, or its designate, acted arbitrarily or capriciously, and that any decision of the Administrator, or its designate shall be enforced unless the action taken is found by a court of competent jurisdiction to have been arbitrary or capricious. Disputes described in Sections 9.2 and 9.4 may be resolved by binding arbitration, if mutually agreed by the Member and the Administrator, or by litigation; and in either case such action may proceed without the necessity of exhausting any other remedies that may be available under this Plan.
9 8.3 Amendment or Termination of the Plan
The Board may, at any time, with or without notice to any person, amend or terminate this Plan. With respect to any Member who has attained his Vesting Date, and subject to Section 9.4, no such amendment or termination shall directly or indirectly deprive such Member of all or any portion of his Benefit or any right to receive his Benefit under the terms of the Plan as in effect immediately before such amendment or termination.
8.4 No Cause of Action
No Member shall have any right, claim or cause of action against any person or entity to appeal the denial of a benefit by the Administrator except as provided in Sections 8.1 and 8.2. In addition, no Member, and no person claiming by, through or on behalf of a Member, shall have any claim to or cause of action for any benefit under this Plan which might have been earned but for the amendment or termination of the Plan, or the termination of the Member’s employment or the removal of the Member from participation under this Plan.
ARTICLE 9: MISCELLANEOUS
9.1 Unsecured General Creditor
Any and all rights created under this Plan shall be unfunded and unsecured contractual rights of the Members against the Company. The Company’s obligation under this Plan shall be a mere promise by the Company to make the benefit payments described herein. Members shall have no legal or equitable right, interest or other claim in any property or assets of the Company by reason of the establishment of this Plan.
9.2 Obligations to the Company
If a Member becomes entitled to a distribution of benefits under this Plan, and if at such time the Member has any outstanding debt, obligation or other liability representing an amount certain owed to the Company, then the Company may offset such amount against the amount of benefits otherwise distributable under the Plan. Such determination shall be made by the Administrator.
9.3 Assignability
No Member shall have any right to anticipate, alienate, assign, sell, transfer, pledge, encumber, attach, mortgage or otherwise hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder. No part of the amounts payable hereunder shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance, nor shall any person have any other claim to any benefit payable under this Plan as a result of a divorce or the Member’s, or any other person’s bankruptcy or insolvency.
10 9.4 Forfeiture
Notwithstanding any provision in the Plan to the contrary, any Member terminated for Cause shall forfeit all rights under this Plan. “Cause” means a willful engaging in gross misconduct demonstrably injurious to the Company. “Willful” means an act or omission in bad faith and without reasonable belief that such act or omission was in the best interests of the Company. Any such determination shall be made by the Board. Each Member shall be entitled to a statement of the facts alleged as a basis for the Board’s determination that a Member has been terminated for Cause and shall be permitted an opportunity to present, in person, for the Board’s consideration, in such manner as the Board shall direct, any facts or arguments on the Member’s behalf as the Member or his representative may determine.
9.5 Sale of Business
The sale as a going business of (i) the Company or (ii) substantially all of the assets of the Company shall not be a termination of Service for the purpose of establishing a Member’s right to receive benefits under this Plan.
9.6 Employment Not Guaranteed
The establishment of this Plan, a Member’s appointment as a Member of the Plan, any provision of this Plan, or any action taken hereunder, shall not be or be construed as a contract of employment for any definite term. The Company may take any action related to a Member’s employment without regard to the effect such action has or may have on a Member’s rights hereunder.
9.7 Captions
The captions to the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
9.8 Validity
In the event any provision of this Plan is found by a court of competent jurisdiction to be invalid, void or unenforceable, such provision shall be stricken and the remaining provisions shall continue in full force and effect.
9.9 Applicable Law
This Plan is subject to interpretation under federal law and, to the extent applicable, the law of the State of Ohio.
11 AK STEEL HOLDING CORPORATION AK STEEL CORPORATION
By:
David C. Horn, Vice President, General Counsel and Secretary
Adopted December 12, 1989 Amended and Restated January 1, 1994 Amended and Restated January 1, 1995 Amended and Restated January 1, 1996 Amended July 17, 1997 Amended September 18, 1997 Amended and Restated January 20, 2000 Amended and Restated November 25, 2003 (as corrected and superseded on March 4, 2004 retroactive to November 25, 2003)
12 EXHIBIT 31.1
SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James L. Wainscott, President and Chief Executive Officer of AK Steel Holding Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AK Steel Holding Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Dated: May 4, 2004 /s/ JAMES L. WAINSCOTT
James L. Wainscott, President and Chief Executive Officer
-1- EXHIBIT 31.2
SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Albert E. Ferrara, Jr., Vice President, Finance and Chief Financial Officer of AK Steel Holding Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AK Steel Holding Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Dated: May 4, 2004 /s/ ALBERT E. FERRARA, JR.
Albert E. Ferrara, Jr., Vice President, Finance and Chief Financial Officer
-1- EXHIBIT 32.1
SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James L. Wainscott, President and Chief Executive Officer of AK Steel Holding Corporation (the “Company”), do hereby certify in accordance with 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge this Quarterly Report of the Company:
(1) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78 m or 78o(d), and,
(2) the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 4, 2004 /s/ JAMES L. WAINSCOTT
James L. Wainscott, President and Chief Executive Officer
-1- EXHIBIT 32.2
SECTION 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Albert E. Ferrara, Jr., Vice President, Finance and Chief Financial Officer of AK Steel Holding Corporation (the “Company”), do hereby certify in accordance with 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge this Quarterly Report of the Company:
(1) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78 m or 78o(d), and,
(2) the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 4, 2004 /s/ ALBERT E. FERRARA, JR.
Albert E. Ferrara, Jr., Vice President, Finance and Chief Financial Officer
-1-