AK Steel today reported net income of $59.2 million on net sales of $1,422.5 million for the first quarter of 2005.

The $59.2 million net income ($0.54 per share of common stock) included the impact of a tax law change enacted in March in the Commonwealth of Kentucky that resulted in a reduction in value of a deferred tax asset. Excluding this change, net income would have been $62.3 million ($0.56 per share). In the first quarter of 2004, AK Steel earned $165.4 million ($1.52 per share), which included an after-tax gain of $174.9 ($1.61 per share) on the sale of a non-core asset.

Net sales of $1,422.5 million on shipments of 1,520,500 tons reflect a revenue increase of more than 25% on shipments slightly higher than the year-ago quarter. First quarter 2004 net sales and shipments were $1,134.4 million and 1,514,300 tons, respectively. Operating profit was $113.6 million ($75 per ton), the best quarterly operating profit per ton performance since 1995, and substantially higher than the $1 per ton earned in the first quarter of 2004.

The company said its average selling price reached a new quarterly record of $934 per ton, up from $747 per ton in the first quarter of 2004 and $878 per ton in the fourth quarter of 2004. The higher average selling prices, resulting primarily from renegotiated sales agreements with the company's contract customers and higher spot market pricing, more than offset significantly higher costs during the quarter for iron ore, scrap, purchased carbon slabs and natural gas, compared to the first quarter of 2004. Planned maintenance outages at the company's Middletown and Mansfield facilities in Ohio adversely affected first quarter 2005 shipments and reduced pre-tax earnings by approximately $18 million.

"Despite significant challenges, AK Steel turned in a very good first quarter performance, marked by numerous awards for employee safety and product quality," said James L. Wainscott, President and CEO. "Although we reached the highest operating profit per ton in 39 quarters, recent raw material price increases and softening in key markets will test our mettle the balance of the year, and necessitate even more diligence in cost reduction efforts."

During the first quarter of 2005, AK Steel employees received five safety awards as well as three quality and customer service awards, including Toyota's Regional Contribution Award. AK Steel was the only steelmaker worldwide to receive this award.

AK Steel said it ended the first quarter of 2005 with $259.0 million of cash on its balance sheet and $529.5 million of availability under its two credit facilities. The cash balance decreased $118.1 million in the quarter primarily due to a $150.0 million voluntary pension contribution the company made in January 2005.

Outlook—AK Steel said that it expects second quarter shipments to be approximately 1,600,000 tons, reflecting continued strong shipments to carbon, stainless and electrical markets and no significant planned maintenance outages. The company also expects second quarter 2005 raw material costs, primarily iron ore, purchased carbon slabs and certain steelmaking alloys, to increase over first quarter 2005 levels. As a result, the company expects to report operating results for the second quarter of 2005 in a range between $55 and $60 per ton.

Headquartered in Middletown, Ohio, AK Steel produces flat-rolled carbon, stainless and electrical steels, as well as tubular steel products for the automotive, appliance, construction and manufacturing markets.