<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 2000 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
703 Curtis Street, Middletown, Ohio 45043
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 425-5000
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
107,643,872 shares of common stock
----------------------------------
(as of October 25 ,2000)
<PAGE>
AK STEEL HOLDING CORPORATION
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income -
Three- and Nine-Month Periods Ended September 30, 1999 and 2000 1
Condensed Consolidated Balance Sheets -
December 31, 1999 and September 30, 2000 2
Condensed Consolidated Statements of Cash Flows -
Nine-Month Periods Ended September 30, 1999 and 2000 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of the
Condensed Consolidated Financial Statements 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
<S> <C> <C> <C> <C>
1999 2000 1999 2000
-------- -------- -------- --------
Net sales $1,055.5 $1,116.1 $3,193.3 $3,482.0
Cost of products sold 841.0 894.8 2,559.0 2,813.7
Selling and administrative expenses 77.2 65.6 228.7 198.4
Depreciation 54.9 57.6 155.3 178.0
Special charge (Note 4) 42.0 -- 42.0 --
-------- -------- -------- --------
Total operating costs 1,015.1 1,018.0 2,985.0 3,190.1
Operating profit 40.4 98.1 208.3 291.9
Interest expense 29.2 34.0 89.2 102.2
Other income 8.9 2.0 18.5 3.5
-------- -------- -------- --------
Income before income taxes 20.1 66.1 137.6 193.2
Income tax provision (Note 5) 15.0 24.8 53.3 76.3
Minority interest 2.7 -- 6.7 --
-------- -------- -------- --------
Income from continuing operations 2.4 41.3 77.6 116.9
Discontinued operations (Note 6) -- -- 7.5 --
-------- -------- -------- --------
Income before extraordinary loss 2.4 41.3 85.1 116.9
Extraordinary loss on retirement of debt, net of tax (Note 7) -- -- 13.4 --
-------- -------- -------- --------
Net income $ 2.4 $ 41.3 $ 71.7 $ 116.9
======== ======== ======== ========
Earnings per share: (Note 2)
Basic earnings per share:
Income from continuing operations $ -- $ 0.38 $ 0.70 $ 1.05
Discontinued operations -- -- 0.07 --
Extraordinary loss on retirement of debt -- -- 0.13 --
-------- -------- -------- --------
Net income $ -- $ 0.38 $ 0.64 $ 1.05
======== ======== ======== ========
Diluted earnings per share:
Income from continuing operations $ -- $ 0.38 $ 0.69 $ 1.05
Discontinued operations -- -- 0.07 --
Extraordinary loss on retirement of debt -- -- 0.13 --
-------- -------- -------- --------
Net income $ -- $ 0.38 $ 0.63 $ 1.05
======== ======== ======== ========
Cash dividends per common share $ 0 .125 $ 0.125 $0 . 375 $ 0.375
Common shares and common share equivalents
outstanding (weighted average in millions):
For basic earnings per share 101.2 108.7 101.0 110.1
For diluted earnings per share 101.8 109.4 101.6 110.9
</TABLE>
___________
See notes to condensed consolidated financial statements
-1-
<PAGE>
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
ASSETS December 31, September 30,
<S> <C> <C>
1999 2000
-------- --------
Current Assets:
Cash and cash equivalents $ 54.4 $ 147.3
Accounts receivable 507.2 590.7
Inventories (Note 3) 797.6 855.2
Deferred tax asset 64.5 79.0
Other current assets 8.8 16.9
-------- --------
Total Current Assets 1,432.5 1,689.1
-------- --------
Property, Plant and Equipment 4,573.5 4,646.7
Less accumulated depreciation 1,585.7 1,749.6
-------- --------
Property, plant and equipment, net 2,987.8 2,897.1
-------- --------
Other Assets:
AFSG Holdings, Inc. (Note 8) 85.6 85.6
Other investments 51.7 66.5
Goodwill 121.3 116.6
Prepaid pension 122.4 161.4
Deferred tax asset 328.0 241.2
Other 72.2 55.8
-------- --------
TOTAL ASSETS $5,201.5 $5,313.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 496.0 $ 536.3
Accrued liabilities 297.3 311.6
Current portion of long-term debt 5.9 3.3
Current portion of pension and other postretirement benefit obligations 68.8 66.5
-------- --------
Total Current Liabilities 868.0 917.7
-------- --------
Noncurrent Liabilities:
Long-term debt 1,451.0 1,450.3
Other postretirement benefit obligations 1,390.7 1,396.9
Other liabilities 214.0 229.5
-------- --------
Total Noncurrent Liabilities 3,055.7 3,076.7
-------- --------
TOTAL LIABILITIES 3,923.7 3,994.4
-------- --------
Stockholders' Equity:
Preferred stock 14.9 12.5
Common stock, authorized 200,000,000 shares of
$.01 par value each; issued 1999, 115,048,490
shares, 2000, 115,824,359 shares; outstanding
1999, 110,640,088 shares, 2000, 107,642,577 shares 1.2 1.2
Additional paid-in capital 1,793.6 1,801.5
Treasury stock, common shares at cost,
1999, 4,408,402 shares; 2000, 8,181,782 shares (80.2) (119.3)
Accumulated deficit (450.0) (375.2)
Accumulated other comprehensive income (loss) (Note 9) (1.7) (1.8)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 1,277.8 1,318.9
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,201.5 $5,313.3
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE>
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Nine Months Ended
September 30,
---------------------------
1999 2000
---- ----
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 199.4 $279.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital investments (253.4) (88.5)
Purchase of long-term investments (0.2) (16.4)
Proceeds from the sale of assets and investments 6.3 5.7
Change in short-term investments (66.7) --
Other 1.0 (0.5)
------- ------
NET CASH FLOWS FROM INVESTING ACTIVITIES (313.0) (99.7)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5.6 1.6
Proceeds from sale of common stock, held in treasury 8.0 --
Increase in notes payable 38.0 --
Proceeds from issuance of long-term debt 460.0 --
Principal payments on long-term debt (441.1) (3.2)
Common stock dividends paid (22.3) (41.5)
Preferred stock dividends paid (7.3) (0.7)
Purchase of common stock, held in treasury (1.5) (39.1)
Purchase of preferred stock -- (2.2)
Conversion of preferred stock (117.9) --
Underwriting discount and fees (11.0) --
Debt prepayment fees (13.1) --
Other (1.2) (1.4)
------- ------
NET CASH FLOWS FROM FINANCING ACTIVITIES (103.8) (86.5)
------- ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (217.4) 92.9
Cash and cash equivalents, beginning of period 346.7 54.4
------- ------
Cash and cash equivalents, end of period $ 129.3 $147.3
======= ======
Supplemental disclosure of cash flow information:
------------------------------------------------
Cash paid during the period for:
Interest, net of capitalized interest $73.2 $88.2
Income taxes 6.3 4.2
Supplemental disclosure of non-cash investing
and financing activities
Issuance of restricted stock $10.8 $ 6.0
See notes to condensed consolidated financial statements.
-3-
<PAGE>
AK STEEL HOLDING CORPORATION
NOTES TO CONDENSED 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 condensed consolidated financial
statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of the
Company as of September 30, 2000, and the results of its operations for the
three and nine-month periods ended September 30, 1999 and 2000, and cash
flows for the nine-month period ended September 30, 1999 and 2000. The
results of operations for the nine months ended September 30, 2000 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2000. These condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements
of AK Holding for the year ended December 31, 1999.
There is no summarized financial information included for AK Steel because
there is no substantial difference in the operations of AK Steel and AK
Holding and because the debt of AK Steel is fully and unconditionally
guaranteed by AK Holding. AK Holding has no independent operations. Interim
financial information for 1999 has been restated to reflect the merger of
Armco Inc. with and into AK Steel, which was accounted for as a pooling of
interests.
2. Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
<S> <C> <C> <C> <C>
1999 2000 1999 2000
------ ------ ------ ------
Income for calculation of basic earnings per share:
Income from continuing operations $ 2.4 $ 41.3 $ 77.6 $116.9
Less: Preferred stock dividends 2.4 0.2 7.3 0.7
------ ------ ------ ------
Income from continuing operations
available to common stockholders -- 41.1 70.3 116.2
Discontinued operations -- -- 7.5 --
Extraordinary loss on retirement of debt -- -- 13.4 --
------ ------ ------ ------
Net income available to common stockholders $ -- $ 41.1 $ 64.4 $116.2
====== ====== ====== ======
Weighted average common shares (in millions) 101.2 108.7 101.0 110.1
====== ====== ====== ======
Basic earnings per share:
Income from continuing operations $ -- $ 0.38 $ 0.70 $ 1.05
Discontinued operations -- -- 0.07 --
Extraordinary loss on retirement of debt -- -- 0.13 --
------ ------ ------ ------
Net income $ -- $ 0.38 $ 0.64 $ 1.05
====== ====== ====== ======
Income for calculation of diluted earnings per share:
Income from continuing operations $ 2.4 $ 41.3 $ 77.6 $116.9
Less: Preferred stock dividends 2.4 -- 7.3 --
------ ------ ------ ------
Income from continuing operations
available to common stockholders -- 41.3 70.3 116.9
Discontinued operations -- -- 7.5 --
Extraordinary loss on retirement of debt -- -- 13.4 --
------ ------ ------ ------
Net income available to common stockholders $ -- $ 41.3 $ 64.4 $116.9
====== ====== ====== ======
Weighted average common shares (in millions) 101.2 108.7 101.0 110.1
Assumed conversion of preferred stock -- 0.7 -- 0.7
Common stock options outstanding 0.6 -- 0.6 0.1
------ ------ ------ ------
Common shares outstanding as adjusted 101.8 109.4 101.6 110.9
====== ====== ====== ======
Diluted earnings per share:
Income from continuing operations $ -- $ 0.38 $ 0.69 $ 1.05
Discontinued operations -- -- 0.07 --
Extraordinary loss on retirement of debt -- -- 0.13 --
------ ------ ------ ------
Net income $ -- $ 0.38 $ 0.63 $ 1.05
====== ====== ====== ======
</TABLE>
-4-
<PAGE>
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, September 30,
1999 2000
------ ------
Finished and semi-finished $630.4 $732.4
Raw materials 190.0 164.4
------ ------
Total cost 820.4 896.8
Adjustment to state inventories at LIFO value (22.8) (41.6)
------ ------
Net inventories $797.6 $855.2
====== ======
4. Special Charge
In the third quarter of 1999, the Company recognized a $42.0 special charge
for costs related to the merger with Armco Inc. Included in the special
charge were $26.0 of expenses incurred for banking, legal, accounting and
other transaction fees, and $16.0 for certain required payments under the
change-of-control provisions contained in Armco's benefit plans. Cash
payments related to this special charge were made primarily in the fourth
quarter of 1999.
5. Taxes
The income tax provision for the nine-month period ended September 30, 1999
includes an $11.6 recycling tax credit received from the Commonwealth of
Kentucky in the first quarter of that year, but which related to prior
years.
6. Discontinued Operations
Certain of Armco's former businesses included operations in foreign
countries. At the time of their sale or closure, some of these operations
had unresolved tax issues in those countries. Following consultation with
local country advisors in 1999, Armco determined that it had resolved most
of these issues and in the second quarter of 1999 reversed a majority of
the related reserves, recognizing income in discontinued operations of
$7.5, or $0.07 per share in the nine months ended September 30, 1999.
7. Extraordinary Loss on Early Retirement of Debt
In the nine months ended September 30, 1999, the Company recorded
extraordinary losses of $13.4, or $0.13 per share related to the early
redemption of AK Steel's 10-3/4% Senior Notes Due 2004 and Armco's 9-3/8%
Senior Notes Due 2000.
8. AFSG Holdings, Inc.
In March 1997, North Atlantic Insurance Company, a group of international
insurance companies previously affiliated with Armco's Financial Services
Group but sold in 1991, filed an application for provisional liquidation in
the United Kingdom. As a result, claims related to certain insurance
policies assumed by North Atlantic were asserted by policyholders against
Northwestern National Insurance Company ("NNIC"). NNIC, which is currently
in runoff, is a subsidiary of AFSG Holdings, Inc. and an indirect
subsidiary of the Company. On April 21, 2000, the U.S. Bankruptcy Court
issued a permanent injunction prohibiting policyholders from asserting
claims related to these policies against NNIC and directing that any such
claims be made against the North Atlantic estate.
9. Comprehensive Income
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
<S> <C> <C> <C> <C>
1999 2000 1999 2000
----- ----- ----- ------
Net income $ 2.4 $41.3 $71.7 $116.9
Other comprehensive income, net of tax:
Foreign currency translation adjustment (0.3) -- (1.4) (1.2)
Unrealized gains/losses on securities:
Unrealized holding gains (losses) arising in period -- 0.7 0.3 1.0
Reclass (gains) losses included in net income (1.4) -- (1.8) 0.1
----- ----- ----- ------
Comprehensive income $ 0.7 $42.0 $68.8 $116.8
===== ===== ===== ======
</TABLE>
10. Segment Information
The Company's Steel Operations consist of the production, finishing and
sale of flat-rolled carbon, stainless and electrical steels. The Company's
Other Operations include an industrial park, the production and sale
-5-
<PAGE>
of snowplow and ice control products, and the production and sale of steel
pipe and tubular products. The following presents the results of the
Company's Steel Operations and Other Operations.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
Net sales: 1999 2000 1999 2000
-------- -------- -------- --------
Steel Operations $ 967.7 $1,025.5 $2,971.0 $3,239.4
Other Operations 87.8 90.6 222.3 242.6
-------- -------- -------- --------
Total net sales $1,055.5 $1,116.1 $3,193.3 $3,482.0
======== ======== ======== ========
Operating profit:
Steel Operations $ 23.8 $ 83.5 $ 178.9 $ 264.9
Other Operations 16.6 14.6 29.4 27.0
-------- -------- -------- --------
Total operating profit $ 40.4 $ 98.1 $ 208.3 $ 291.9
======== ======== ======== ========
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
---------------------
The Company's principal business focus is its Steel Operations, which currently
consist of seven steelmaking and finishing facilities that produce flat-rolled
carbon, stainless and electrical steel products that are sold primarily to the
automotive, appliance, industrial machinery and equipment, and construction
markets, as well as to distributors, service centers and converters. The Company
also produces standard steel pipe and tubular products, as well as snowplows and
ice control products for four-wheel drive light trucks, and operates an
industrial park on the Houston, Texas, ship channel.
For the three months ended September 30, 2000, net sales were $1,116.1, an
increase of 6% from the $1,055.5 reported for the corresponding period in 1999.
Steel Operations contributed $1,025.5 to total net sales in the third quarter of
2000, compared to $967.7 for the 1999 period, also a 6% increase. These
increases were due primarily to continued growth in the percentage of total
shipments attributable to value-added products, consisting primarily of
stainless and electrical steels and coated and cold-rolled carbon steels. For
the three months ended September 30, 2000, value-added products comprised
approximately 91% of total shipments, compared to 81% for the corresponding
period of 1999. Net sales for the nine months ended September 30, 2000 increased
9% to $3,482.0 from the $3,193.3 reported for the first nine months of 1999,
primarily due to the improved product mix, which continued from the first half
of 2000.
Total steel shipments during the three months ended September 30, 2000,
inclusive of tubular products, increased slightly to 1,584,000 tons from the
1,569,000 tons shipped in the third quarter of 1999, reflecting higher shipments
of stainless, electrical and cold-rolled carbon steels, partially offset by
lower hot-rolled carbon shipments and the January 2000 closure of a redundant
galvanizing facility in Dover, Ohio. The third quarter 1999 shipments include
46,000 tons of galvanized carbon steel shipped from the Dover facility. Total
shipments for the first nine months of 2000 were 4,898,000 tons, compared to
4,943,000 tons for the corresponding 1999 period, with the decline being
primarily attributable to a decrease in lower valued hot-rolled steel shipments
and the Dover closure, which more than offset year-to-date increased shipments
of stainless, electrical and cold-rolled carbon steel.
Operating profit for the three months ended September 30, 2000, totaled $98.1,
or $62 per ton shipped. Excluding the $42.0 special charge described in Note 4
to the accompanying condensed consolidated financial statements, third quarter
1999 operating profit totaled $82.4, or $53 per ton. The 19% increase in third
quarter operating profit was due primarily to the benefits of the increased
shipments of value-added products, which carry higher margins. Substantially
higher costs for steel scrap, purchased carbon steel slabs and, most
particularly, natural gas in the third quarter of 2000 were partly offset by
higher than expected merger synergies, which totaled $21.0, and other cost
savings that resulted from more efficient utilization of production facilities.
For the first nine months of 2000, operating profit increased to $291.9, or $60
per ton, compared to $250.3, or $51 per ton, excluding the special charge, in
the first nine months of 1999, reflecting the benefits of approximately $61.0 of
merger synergies and the enhanced product mix. These benefits were partially
offset by higher costs for scrap, purchased slabs and natural gas, an $11.0
scheduled maintenance outage at the Company's Middletown Works blast furnace
during the first quarter of 2000 and $7.0 of excess costs during that quarter as
a result of a labor dispute at the Company's Mansfield Works. Although that
dispute is continuing, no such excess costs were incurred in either the second
or third quarters of 2000.
-6-
<PAGE>
Interest expense for the three months ended September 30, 2000 increased by
$4.8, or approximately 16%, over the corresponding 1999 period, due primarily to
a $5.2 reduction in the amount of interest that the Company capitalized in the
2000 period as a result of the completion of construction of its Rockport Works.
For the nine months ended September 30, 2000, a $19.2 reduction in capitalized
interest was the principal reason for a $13.0 increase in interest expense
compared to the first nine months of 1999. Other income, consisting primarily of
interest earned on cash balances, declined in both the third quarter and first
nine months of 2000, due to lower average cash balances during those periods
compared to the corresponding periods in 1999.
The book tax rate for 2000 is estimated to be 37% to 38%, while the projected
cash tax rate is approximately 4%. The difference between the book and cash
rates primarily represents changes in the deferred tax asset for use of net
operating losses, payments on previously accrued retirement benefits and
accelerated tax depreciation over book. The income tax provision for the nine-
month period ended September 30, 1999 includes an $11.6 recycling tax credit
received from the Commonwealth of Kentucky in the first quarter of that year,
but which related to prior years.
Income from continuing operations for the three months ended September 30, 2000
and 1999 was $41.3, or $0.38 per share, and $2.4, or less than one cent per
share, respectively. Excluding the 1999 special charge of $42.0, income from
continuing operations decreased 7% as the increase in operating profit during
the 2000 period was more than offset by higher interest expense, lower interest
income and an increased provision for income taxes. During the nine months ended
September 30, 2000, income from continuing operations was $116.9, or $1.05 per
share, compared to $77.6, or $0.70 per share ($0.69 per share, diluted) in the
first nine months of 1999.
Net income for the three months ended September 30, 2000 and 1999 was $41.3, or
$0.38 per share, and $2.4, or less than one cent per share, respectively. For
the first nine months of 2000 and 1999, net income was $116.9, or $1.05 per
share, and $71.7, or $0.64 per share ($0.63 per share, diluted), respectively.
Net income for the nine months ended September 30, 1999 reflected a reduction
for a $13.4, or $0.13 per share, extraordinary loss on early retirement of debt
(as described in Note 7), which was offset in part by $7.5, or $0.07 per share,
of income from discontinued operations (as described in Note 6).
Outlook
-------
As a result of continued weakness in the spot market and some slight softening
in the automotive sector, the Company expects fourth quarter shipments to be
approximately the same as those in the third quarter. Value-added products are
also expected to remain above 90% of total shipments. However, while only
affecting approximately 25% of steel sales, spot market pricing is expected to
decline, adversely impacting fourth quarter results. In addition, although scrap
and slab prices appear to have stabilized and might decline slightly, natural
gas prices are expected to rise and, unless offset by other cost savings, will
adversely affect future financial results. The Company has scheduled an outage
in the fourth quarter of 2000 for maintenance and upgrading of the melt
facilities at its Butler Works and plans two major blast furnace outages for the
year 2001. Each of the outages is expected to add up to $10.0 in operating costs
in the period they are performed.
Liquidity and Capital Resources
-------------------------------
The Company's liquidity needs are primarily for capital investments, working
capital, employee benefit obligations and interest on outstanding indebtedness.
At September 30, 2000, the Company had $147.3 of cash and cash equivalents, as
well as $216.4 available for borrowings under its $300.0 accounts receivable
purchase credit facility. At that date, there were no outstanding borrowings
under the credit facility and availability was affected solely by outstanding
letters of credit.
Cash flow from operations generated $279.1 for the nine months ended September
30, 2000. Income, excluding depreciation and amortization and other noncash
items, of $378.3 was partially offset by a net increase in working capital. The
working capital increase reflected higher accounts receivables balances,
primarily related to increased third quarter steel sales volume, compared to the
fourth quarter of 1999 and the normal cyclical increase in receivables at the
snowplow company.
During the first nine months of 2000, the Company expended $7.0 of cash to fund
expenses related to the Armco merger. Cash expenditures related to the merger
during the remainder of 2000 are not expected to be material.
During the nine months ended September 30, 2000, cash used in investing
activities totaled $99.7. Capital expenditures were $88.5, including $1.8 in
capitalized interest. Total capital investments for 2000 are expected to be
approximately $140.0 and will be funded by existing cash balances and cash
generated from operations.
-7-
<PAGE>
During the nine months ended September 30, 2000, cash flows from financing
activities used $86.5, including $42.2 for dividends on common and preferred
stock and $40.5 for the purchase of common and preferred stock under the
Company's share repurchase plan.
Share Repurchase Plan
---------------------
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. As of September 30, 2000, the Company had
expended $40.5 to purchase 3,702,600 shares of its common stock and 48,450
shares of its convertible preferred stock pursuant to this authorization. Those
purchases were, and future purchases will be, funded by existing cash balances
and cash generated from operations.
New Accounting Standards
------------------------
In 1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The Company intends to adopt the new standard when required in
2001. At present, the Company does not expect that SFAS No. 133 will have a
material effect on its financial statements.
In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the staff's interpretations of the
application of generally accepted accounting principles to revenue recognition.
The Company will adopt SAB No. 101 when required in the fourth quarter of 2000.
At present, the Company does not expect that SAB No. 101 will have a material
effect on its financial statements.
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, 1999, 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. In addition to those noted in the statements
themselves, these factors include, but are not limited to, the following: risks
of a downturn in the general economy or in the highly cyclical steel industry;
volatility in financial markets, which may affect invested pension plan assets
and the calculation of benefit plan liabilities and expenses; changes in demand
for the Company's products; unplanned plant outages, equipment failures or labor
difficulties; actions by the Company's foreign and domestic competitors;
unexpected outcomes of major litigation and contingencies; changes in United
States trade policy and actions with respect to imports; unanticipated increases
in prices for, or disruptions in the supply of, raw materials, supplies or
utilities; actions by reinsurance companies with which AFSG does business, or
foreign or domestic insurance regulators; and changes in application or scope of
environmental regulations applicable to the Company.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits. None.
--------
B. Reports on Form 8-K.
--------------------
Item Reported Date
------------- ----
Press release, dated July 20, 2000, announcing
second quarter 2000 financial results July 25, 2000
-8-
<PAGE>
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
persons.
AK Steel Holding Corporation
----------------------------
(Registrant)
Date October 26, 2000 /s/ James L. Wainscott
---------------- -----------------------
James L. Wainscott
Senior Vice President, Treasurer and Chief
Financial Officer
Date October 26, 2000 /s/ Donald B. Korade
---------------- ---------------------
Donald B. Korade
Vice President and Controller
-9-
