AK Steel reported net income of $83.1 million on record net sales of $1,337.3 million for the third quarter of 2004, and net income of $341.2 million on net sales of $3,783.5 million for the first nine months of 2004.

Third Quarter Results—Net income of $83.1 million ($0.76 per share of common stock) compares to a net loss of $277.5 million ($2.56 per share) in the third quarter of 2003. The 2004 third quarter reported results include both a tax benefit of $50.2 million ($0.46 per share) related to continuing operations, and a tax provision of $35.5 million ($0.33 per share) associated with the sale of discontinued operations during the first half of 2004, which together resulted in a net tax benefit of $14.7 million ($0.13 per share). Excluding the net tax benefit, the company's earnings were equivalent to $68.4 million ($0.63 per share).

Operating profit was $94.5 million ($61 per ton) compared to an adjusted operating loss of $123.8 million ($82 loss per ton) in the third quarter of 2003, which excluded an impairment of goodwill charge of $101.2 million. Including the impairment of goodwill charge, the third quarter 2003 operating loss was $225 million.

Net sales were a record $1,337.3 million on shipments of 1,541,800 tons, compared to net sales of $1,021.1 million on shipments of 1,502,700 tons in the year-ago quarter.

Nine Months Results—Net income of $341.2 million ($3.13 per share) includes $211.9 million ($1.95 per share) for the combined gain on the sale of Douglas Dynamics and Greens Port Industrial Park in Houston. For the same period in 2003, AK Steel reported a net loss of $396.5 million ($3.66 per share).

Net sales of $3,783.5 million on shipments of 4,621,200 tons, compares to net sales of $2,987.7 million on shipments of 4,267,100 tons for the first nine months of 2003. Operating profit was $152.4 million ($33 per ton) compared to an adjusted operating loss of $282.1 million ($66 per ton) for the first nine months of 2003, exclusive of the impairment of goodwill charge. Including the impairment of goodwill charge, the operating loss for the first nine months of 2003 was $383.3 million.

Comments—"The turnaround of AK Steel continues, propelled by a strong steel market and our constant focus on the second-phase elements of our recovery," said James L. Wainscott, President and CEO of AK Steel. "In that regard, we have made measurable progress in establishing more favorable contract sales agreements and more competitive labor agreements, and we are developing our long-term raw materials strategy, all toward the goal of increasing and sustaining AK Steel's profitability for the long-run," he said.

The company said its average steel selling price was a record $866 per ton in the third quarter of 2004, up 32% from the third quarter of 2003 and about 4% higher than the $835 per ton average in the second quarter of 2004. AK Steel said continued strong global demand for steel lifted shipment volumes and spot market selling prices. The company said its selling prices were also higher as a result of surcharges implemented to partially offset unprecedented high prices for raw materials and energy.

Liquidity—AK Steel said its liquidity at the end of the third quarter of 2004 totaled $775 million, including cash of $314 million, and availability of $461 million under its two credit facilities. The company said it had no cash
borrowings under its credit facilities at any time during the third quarter.

Outlook—AK Steel said that despite rising prices for steelmaking inputs, especially scrap and purchased slabs, the company expects to generate higher operating income in the fourth quarter than the third quarter level. The company said the higher input costs are expected to be offset by increased shipments and higher selling prices.

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.