WEST CHESTER, Ohio,
Jan. 28, 2014 /PRNewswire/ -- AK
Steel (NYSE: AKS) today reported its financial results for the
fourth quarter and full year of 2013.
4th Quarter 2013 Performance Summary
- Shipments of 1,420,000 tons
- Sales of $1.46 billion
with an average selling price of $1,031 per ton
- Net income of $35.2
million, or $0.26 per diluted
share
- Adjusted EBITDA of $87
million
- Substantial reduction of $719
million in pension/OPEB obligations
- Strong liquidity of $845
million
AK Steel reported net income of $35.2
million, or $0.26 per diluted
share of common stock, for the fourth quarter of 2013, compared to
a net loss of $230.4 million, or
$1.89 per diluted share, for the
fourth quarter of 2012. Excluding the effect of an income tax
adjustment described below, the company reported adjusted net
income of $12.5 million, or
$0.09 per diluted share. The company
reported adjusted EBITDA (as defined in the "Non-GAAP Financial
Measures" section below) of $87.2
million, or $61 per ton, for
the fourth quarter of 2013 compared to $16.8
million, or $12 per ton, for
the fourth quarter of 2012. The company's results were also
favorable to a third quarter 2013 net loss of $31.7 million, or $0.23 per diluted share, and the third quarter's
adjusted EBITDA of $53.5 million, or
$43 per ton.
Net sales for the fourth quarter of 2013 were $1.46 billion on shipments of 1,420,000 tons,
compared to net sales of $1.42
billion on shipments of 1,406,100 tons for the year-ago
fourth quarter and net sales of $1.33
billion on shipments of 1,242,400 tons for the third quarter
of 2013. The fourth quarter increase in shipments from the prior
year fourth quarter was primarily due to stronger demand in
automotive sales, partially offset by lower carbon shipments to the
spot market. The increase in shipments from the third quarter of
2013 was primarily a result of higher carbon sales to the spot
market and reflects the benefits of the company's recovery from the
previously disclosed unplanned Middletown
Works blast furnace outage in June
2013 described below.
The company said its average selling price for the fourth
quarter of 2013 was $1,031 per ton, a
2% increase from the $1,011 per ton
reported for the fourth quarter of 2012 and a 4% decrease from the
$1,071 per ton reported for the third
quarter of 2013. The higher average selling price for the fourth
quarter of 2013 compared to the fourth quarter of 2012 was
primarily due to a more favorable mix of value-added products and
higher prices for carbon steel sold to the spot market, partially
offset by lower prices for electrical steel. The lower average
selling price for the fourth quarter of 2013 compared to the third
quarter of 2013 was primarily due to a lower proportion of
shipments of value-added products to the spot market in the fourth
quarter.
Included in the results for the fourth quarter of 2013 was a
non-cash income tax benefit of $22.7
million, or $0.17 per diluted
share, as a result of the allocation of income tax expense to other
comprehensive income, compared to a non-cash income tax charge of
$15.3 million, or $0.11 per diluted share, related to deferred tax
asset valuation allowance changes for the third quarter of 2013.
The results for the fourth quarter of 2012 include a pre-tax
pension corridor charge of $157.3
million, or $0.80 per diluted
share, and a non-cash income tax charge of $96.4 million, or $0.79 per diluted share. The 2013 fourth quarter
results also include a LIFO credit of $4.3
million, compared to a LIFO credit of $30.8 million for the fourth quarter of 2012 and
a LIFO credit of $15.8 million for
the third quarter of 2013.
"I am delighted with our fourth quarter 2013 results and our
strong finish to the year 2013," said James
L. Wainscott, Chairman, President and CEO of AK Steel. "As
we enter 2014, we will build upon our solid foundation for the
future as we continue to make progress and add value to AK
Steel."
The company ended 2013 with total liquidity of $845.1 million, an increase of $33.2 million from September 30, 2013. Liquidity consists of cash
and cash equivalents of $30.1 million
and $815.0 million of availability
under the company's revolving credit facility. There was
$90.0 million of outstanding
borrowings under the company's revolving credit facility as of the
end of 2013. Working capital was a source of $99.0 million and $7.3
million of cash in the fourth quarter and full year of 2013,
respectively.
Full-Year 2013 Results
For the full year, the company reported a net loss of
$46.8 million, or $0.34 per diluted share, compared to a net loss
of $1,027.3 million, or $9.06 per diluted share for 2012. Included in the
results for the full-year 2013 and 2012 were non-cash income tax
charges of $14.4 million, or
$0.10 per diluted share, and
$865.5 million, or $7.63 per diluted share, respectively, as a
result of deferred tax asset valuation allowance changes. The
full-year 2012 results also included a pre-tax pension corridor
charge of $157.3 million, or
$0.86 per diluted share.
Sales for 2013 were $5.57 billion,
a decrease of 6% compared to $5.93
billion for 2012. Shipments for 2013 were 5,275,900 tons, a
decrease of 3% from 5,431,300 tons in 2012 as a result of lower
shipments to the carbon spot market. The company said its average
selling price for full-year 2013 was $1,056 per ton, approximately 3% lower than the
$1,092 per ton reported for 2012. The
lower average selling price for full-year 2013 was primarily due to
lower spot market selling prices in the first half of 2013, lower
selling prices for electrical steel and reduced raw material
surcharges, partially offset by a more favorable mix of value-added
products.
The company reported adjusted EBITDA of $255.0 million, or $48 per ton, for 2013 compared to adjusted EBITDA
of $181.2 million, or $33 per ton, for 2012.
During 2013, the company's pension and other postretirement
benefit obligations declined by $719.0
million as a result of cash payments of $285.3 million from the company for benefit
payments and contributions to the pension trust and VEBAs, strong
asset returns on pension assets and higher interest rates used to
determine the present value of the obligations.
Middletown Works Unplanned Blast Furnace Outage
As previously disclosed, the company's blast furnace at its
Middletown Works experienced an
unexpected mechanical failure in the charging apparatus internal to
the furnace on June 22, 2013. The
company completed repairs and restarted the blast furnace on
July 12, 2013. The company maintains
property damage and business interruption insurance. The company's
results for the fourth quarter and full-year 2013 include
recognized pre-tax losses for the unplanned outage of $4.3 million, or $0.03 per diluted share, and $22.3 million, or $0.16 per diluted share, respectively. No
significant costs associated with the unplanned outage are expected
in 2014.
First Quarter 2014 Outlook
Consistent with its current practice, the company said that it
will provide detailed guidance for its first quarter results of
2014 in March.
Safe Harbor Statement
The statements in this release with respect to future results
reflect management's estimates and beliefs and are intended to be,
and hereby are identified as "forward-looking statements" for
purposes of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "believes," "intends," "plans," "estimates" and
other similar references to future periods typically identify such
forward-looking statements. The company cautions readers that such
forward-looking statements, including the projected loss related to
the unplanned blast furnace outage and the amount of its related
insurance recoveries, involve risks and uncertainties that could
cause actual results to differ materially from those currently
expected by management, including those risks and uncertainties
discussed in the company's Annual Report on Form 10-K for the year
ended December 31, 2012, as updated
in subsequent Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K filed with or furnished to the Securities and Exchange
Commission. Except as required by law, the company disclaims any
obligation to update any forward-looking statements to reflect
future developments or events.
AK Steel
AK Steel produces flat-rolled carbon, stainless and electrical
steels, primarily for automotive, infrastructure and manufacturing,
construction and electrical power generation and distribution
markets. The company employs about 6,100 men and women in
Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pennsylvania; Ashland, Kentucky; Rockport, Indiana; and its corporate
headquarters in West Chester,
Ohio. Additional information about AK Steel is available on
the company's web site at www.aksteel.com.
AK Tube LLC, a wholly-owned subsidiary of AK Steel, employs
about 300 men and women in plants in Walbridge, Ohio and Columbus, Indiana. AK Tube produces carbon and
stainless electric resistance welded (ERW) tubular steel products
for truck, automotive and other markets. Additional information
about AK Tube LLC is available on its web site at
www.aktube.com.
AK Coal Resources, Inc., another wholly-owned subsidiary of AK
Steel, produces metallurgical coal from reserves in Somerset County, Pennsylvania. AK Steel also
owns 49.9% of Magnetation LLC, a joint venture headquartered in
Grand Rapids, Minnesota, which
produces iron ore concentrate from previously mined ore
reserves.
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AK STEEL HOLDING
CORPORATION
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(Unaudited)
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(Dollars and shares
in millions, except per share and per ton data)
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Three Months
Ended
December 31,
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Twelve Months
Ended
December 31,
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2013
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2012
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2013
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2012
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Shipments (000
tons)
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1,420.0
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1,406.1
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5,275.9
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5,431.3
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Selling price per
ton
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$
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1,031
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$
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1,011
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$
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1,056
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$
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1,092
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Net
sales
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$
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1,464.8
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$
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1,423.1
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$
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5,570.4
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$
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5,933.7
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Cost of products
sold
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1,323.9
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1,352.7
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5,107.8
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5,539.1
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Selling and
administrative expenses
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52.0
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50.2
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205.3
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208.7
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Depreciation
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45.2
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47.1
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190.1
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192.0
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Pension and OPEB
expense (income)
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(19.3)
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(7.3)
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(68.6)
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(35.3)
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Pension corridor
charge
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--
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157.3
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--
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157.3
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Total operating
costs
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1,401.8
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1,600.0
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5,434.6
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6,061.8
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Operating profit
(loss)
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63.0
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(176.9)
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135.8
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(128.1)
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Interest
expense
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32.3
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26.3
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127.4
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86.7
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Other income
(expense)
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(2.9)
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4.3
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(1.4)
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6.2
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Income (loss)
before income taxes
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27.8
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(198.9)
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7.0
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(208.6)
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Income tax expense
(benefit)
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(24.0)
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22.7
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(10.4)
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790.0
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Net income
(loss)
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51.8
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(221.6)
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17.4
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(998.6)
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Less: Net income
(loss) attributable to noncontrolling interests
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16.6
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8.8
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64.2
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28.7
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Net income (loss)
attributable to AK Steel Holding Corporation
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$
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35.2
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$
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(230.4)
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$
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(46.8)
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$
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(1,027.3)
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Basic and diluted
earnings per share:
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Net income (loss)
attributable to AK Steel Holding Corporation:
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$
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0.26
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$
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(1.89)
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$
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(0.34)
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$
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(9.06)
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Weighted-average
shares outstanding:
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Basic
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135.9
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121.3
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135.8
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113.0
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Diluted
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136.3
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121.3
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135.8
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113.0
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Dividends declared
and paid per share
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$
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--
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$
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--
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$
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--
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$
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0.10
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AK STEEL HOLDING
CORPORATION
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CONSOLIDATED
BALANCE SHEETS
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(Unaudited)
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(Dollars in millions,
except per share amounts)
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December 31,
2013
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December 31,
2012
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ASSETS
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Current
assets:
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Cash and cash
equivalents
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$
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45.3
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$
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227.0
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Accounts receivable,
net
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525.2
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473.9
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Inventory,
net
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586.6
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609.2
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Other current
assets
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116.1
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132.6
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Total current
assets
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1,273.2
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1,442.7
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Property, plant and
equipment
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5,871.9
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5,943.9
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Accumulated
depreciation
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(3,991.8)
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(3,931.6)
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Property, plant and
equipment, net
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1,880.1
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2,012.3
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Investment in
Magnetation LLC
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187.8
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150.0
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Other non-current
assets
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264.6
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298.1
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TOTAL
ASSETS
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$
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3,605.7
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$
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3,903.1
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LIABILITIES AND
EQUITY (DEFICIT)
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Current
liabilities:
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Accounts
payable
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$
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601.8
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$
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538.3
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Accrued
liabilities
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142.9
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164.8
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Current portion of
long-term debt
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0.8
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0.7
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Current portion of
pension and other postretirement benefit obligations
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85.9
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108.6
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Total current
liabilities
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831.4
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812.4
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Long-term
debt
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1,506.2
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1,411.2
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Pension and other
postretirement benefit obligations
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965.4
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1,661.7
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Other non-current
liabilities
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110.0
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108.8
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TOTAL
LIABILITIES
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3,413.0
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3,994.1
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Equity
(deficit):
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Common stock,
authorized 200,000,000 shares of $.01 par value each; issued
149,691,388 and 149,094,571 shares in 2013 and 2012; outstanding
136,380,078 and 135,944,172 shares in 2013 and 2012
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1.5
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1.5
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Additional paid-in
capital
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2,079.2
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2,069.7
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Treasury stock, common
shares at cost, 13,311,310 and 13,150,399 shares in 2013 and
2012
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(174.0)
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(173.3)
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Accumulated
deficit
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(2,451.1)
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(2,404.3)
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Accumulated other
comprehensive income
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323.4
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1.1
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Total stockholders'
equity (deficit)
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(221.0)
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(505.3)
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Noncontrolling
interests
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413.7
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414.3
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TOTAL EQUITY
(DEFICIT)
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192.7
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(91.0)
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TOTAL LIABILITIES
AND EQUITY (DEFICIT)
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$
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3,605.7
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$
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3,903.1
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AK STEEL HOLDING
CORPORATION
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CONSOLIDATED
STATEMENTS OF CASH FLOWS
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(Unaudited)
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(Dollars in
millions)
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Twelve Months
Ended
December 31,
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2013
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2012
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CASH FLOWS FROM
OPERATING ACTIVITIES:
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Net income
(loss)
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$
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17.4
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$
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(998.6)
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Pension corridor
charge
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--
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157.3
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Depreciation
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176.1
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178.4
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Depreciation--SunCoke
Middletown
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14.0
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13.6
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Amortization
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19.1
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17.0
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Deferred income
taxes
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(7.3)
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771.2
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Pension and OPEB
expense (income)
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(68.6)
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(35.3)
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Contributions to
pension trust
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(181.1)
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(170.2)
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Contributions to
Butler and Zanesville retirees VEBAs
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(30.8)
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(31.7)
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Other postretirement
payments
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(63.4)
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(64.1)
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Changes in working
capital
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7.3
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(113.7)
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Changes in working
capital--SunCoke Middletown
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4.3
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(4.4)
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Other operating
items, net
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2.8
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9.7
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Net cash flows from
operating activities
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(110.2)
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(270.8)
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CASH FLOWS FROM
INVESTING ACTIVITIES:
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Capital
investments
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(60.0)
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(45.5)
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Capital
investments--SunCoke Middletown
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(3.6)
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(18.6)
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Investments in
acquired businesses
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(50.0)
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(60.6)
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Other investing
items, net
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15.1
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6.1
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Net cash flows from
investing activities
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(98.5)
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(118.6)
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CASH FLOWS FROM
FINANCING ACTIVITIES:
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Net borrowings
(repayments) under credit facility
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90.0
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(250.0)
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Proceeds from
issuance of long-term debt
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31.9
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|
873.3
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Redemption of
long-term debt
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(27.4)
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(74.0)
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Proceeds from
issuance of common stock
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--
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96.4
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Debt issuance
costs
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(3.4)
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(22.3)
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Common stock
dividends paid
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--
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(11.0)
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SunCoke Middletown
advances from (distributions to) noncontrolling interest
owners
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(64.8)
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(36.6)
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Other financing
items, net
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0.7
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(1.4)
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Net cash flows from
financing activities
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27.0
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|
574.4
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Net increase
(decrease) in cash and cash equivalents
|
|
(181.7)
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|
185.0
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Cash and cash
equivalents, beginning of period
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|
227.0
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|
42.0
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Cash and cash
equivalents, end of period
|
|
$
|
45.3
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|
$
|
227.0
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|
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AK STEEL HOLDING CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in millions)
In certain of its disclosures in this news release, the company
has reported adjusted EBITDA and adjusted net income (loss) that
exclude the effects of a pension corridor charge and deferred tax
asset valuation allowance charges. The company has made these
adjustments because management believes that doing so enhances the
understanding of the company's financial results.
EBITDA is an acronym for earnings before interest, taxes,
depreciation and amortization. It is a metric that is sometimes
used to compare the results of companies by removing the effects of
different factors that might otherwise make comparisons inaccurate
or inappropriate. For purposes of this news release, the company
has made adjustments to EBITDA in order to exclude the effect of
noncontrolling interests and pension corridor accounting charges.
For purposes of this report, "adjusted EBITDA" is defined as net
income (loss) attributable to AK Holding, plus income tax provision
(benefit), net interest expense, depreciation and amortization and
pension corridor charge. Adjusted EBITDA is presented because the
company believes it is a useful indicator of its performance and
ability to meet debt service and capital expenditure requirements.
It is not, however, intended as an alternative measure of operating
results or cash flow from operations as determined in accordance
with generally accepted accounting principles. Adjusted EBITDA is
not necessarily comparable to similarly titled measures used by
other companies.
Management believes that reporting adjusted net income (loss),
as a total and on a per share basis, which is defined as net income
(loss) with the charges for deferred tax asset valuation allowance
and the pension corridor charge excluded, more clearly reflects the
company's current operating results and provides investors with a
better understanding of the company's overall financial
performance. In addition, the adjusted results, although
not a financial measure under GAAP, facilitate the ability to
analyze the company's financial results in relation to those of its
competitors and to the company's prior financial performance by
excluding items which otherwise would distort the comparison. Also,
although the tax valuation charge reduces reported net income
(loss), it is a non-cash charge.
Management views the reported results of adjusted EBITDA and
adjusted net income (loss) as important operating performance
measures and believes that the GAAP financial measure most directly
comparable is net income (loss) (as a total and on a per share
basis). Adjusted EBITDA and adjusted net income (loss)
are used by management as a supplemental financial measure to
evaluate the performance of the business. Management
believes that these non-GAAP measures, when analyzed in conjunction
with the company's GAAP results and the accompanying
reconciliations, provide additional insight into the financial
trends of the company's business versus the GAAP results alone.
Neither current nor potential investors in the company's
securities should rely on the adjusted EBITDA and adjusted net
income (loss) results as a substitute for any GAAP financial
measure and the company encourages current and potential investors
to review the reconciliations of adjusted EBITDA and adjusted net
income (loss) to the comparable GAAP financial measure.
The following schedules reflect the reconciliations of the
non-GAAP quarterly financial measures discussed in this
release:
Reconciliation of
Adjusted EBITDA
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(dollars in
millions)
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Three Months
Ended
December 31,
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Twelve Months
Ended
December 31,
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Three Months
Ended
September 30,
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2013
|
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2012
|
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2013
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2012
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|
2013
|
Net income (loss)
attributable to AK Holding
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$
|
35.2
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|
$
|
(230.4)
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|
$
|
(46.8)
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$
|
(1,027.3)
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$
|
(31.7)
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Net income
attributable to noncontrolling interests
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16.6
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8.8
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64.2
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28.7
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16.0
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Income tax expense
(benefit)
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|
(24.0)
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22.7
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|
(10.4)
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790.0
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6.7
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Interest
expense
|
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32.3
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26.3
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127.4
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86.7
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32.1
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Interest
income
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(0.1)
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(0.1)
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(1.1)
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(0.4)
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(0.1)
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Depreciation
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45.2
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47.1
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190.1
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|
192.0
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48.4
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Amortization
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2.2
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2.8
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9.9
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14.2
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1.6
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EBITDA
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107.4
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(122.8)
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333.3
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83.9
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73.0
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Less: EBITDA of
noncontrolling interests (a)
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20.2
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17.7
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78.3
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60.0
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19.5
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Pension corridor
charge
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--
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157.3
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--
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157.3
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--
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Adjusted
EBITDA
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$
|
87.2
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|
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$
|
16.8
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$
|
255.0
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$
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181.2
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$
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53.5
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(a) The
reconciliation of EBITDA of noncontrolling interests to net income
attributable to noncontrolling interests is as
follows:
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(dollars in
millions)
|
|
Three Months
Ended December 31,
|
|
Twelve Months
Ended December 31,
|
|
Three Months
Ended September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
Net income
attributable to noncontrolling interests
|
|
$
|
16.6
|
|
|
$
|
8.8
|
|
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$
|
64.2
|
|
|
$
|
28.7
|
|
|
$
|
16.0
|
|
Income tax
expense
|
|
--
|
|
|
5.4
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--
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17.6
|
|
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--
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Depreciation
|
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3.6
|
|
|
3.5
|
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14.1
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|
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13.7
|
|
|
3.5
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EBITDA of
noncontrolling interests
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|
$
|
20.2
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$
|
17.7
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$
|
78.3
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$
|
60.0
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$
|
19.5
|
|
Reconciliation of
Adjusted Net Income (Loss)
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|
(dollars in millions,
except per share)
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
Three
Months
Ended
September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
Reconciliation to
Net Income (Loss) Attributable to AK Steel Holding
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Adjusted net income
(loss) attributable to AK Steel Holding Corporation
|
|
$
|
12.5
|
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|
$
|
(36.6)
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$
|
(32.4)
|
|
|
$
|
(64.4)
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$
|
(16.4)
|
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Pension corridor
charge (net of tax)
|
|
--
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|
(97.4)
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--
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|
|
(97.4)
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|
--
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Non-cash income tax
(charge) credit from change in deferred tax asset valuation
allowance
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22.7
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(96.4)
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(14.4)
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(865.5)
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(15.3)
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Net income (loss)
attributable to AK Steel Holding Corporation, as
reported
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$
|
35.2
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$
|
(230.4)
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$
|
(46.8)
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$
|
(1,027.3)
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$
|
(31.7)
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Reconciliation to
Basic and Diluted Earnings (Losses) per Share
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Adjusted basic and
diluted earnings (losses) per share
|
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$
|
0.09
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$
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(0.30)
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$
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(0.24)
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$
|
(0.57)
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$
|
(0.12)
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Pension corridor
charge
|
|
--
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|
|
(0.80)
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--
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(0.86)
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|
--
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Non-cash income tax
(charge) credit from change in deferred tax asset valuation
allowance
|
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0.17
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(0.79)
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(0.10)
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(7.63)
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|
(0.11)
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Basic and diluted
earnings (losses) per share, as reported
|
|
$
|
0.26
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|
$
|
(1.89)
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|
|
$
|
(0.34)
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|
|
$
|
(9.06)
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|
$
|
(0.23)
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|
|
AK STEEL HOLDING
CORPORATION
|
STEEL
SHIPMENTS
|
(Unaudited)
|
(Tons in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Tons Shipped by
Product
|
|
|
|
|
|
|
|
|
Stainless/electrical
|
|
195.6
|
|
|
188.5
|
|
|
822.1
|
|
|
849.1
|
|
Coated
|
|
656.8
|
|
|
655.8
|
|
|
2,469.6
|
|
|
2,409.4
|
|
Cold-rolled
|
|
314.9
|
|
|
290.1
|
|
|
1,115.9
|
|
|
1,138.7
|
|
Tubular
|
|
29.7
|
|
|
28.5
|
|
|
122.2
|
|
|
132.0
|
|
Subtotal
value-added shipments
|
|
1,197.0
|
|
|
1,162.9
|
|
|
4,529.8
|
|
|
4,529.2
|
|
|
|
|
|
|
|
|
|
|
Hot-rolled
|
|
195.9
|
|
|
214.3
|
|
|
643.5
|
|
|
767.6
|
|
Secondary
|
|
27.1
|
|
|
28.9
|
|
|
102.6
|
|
|
134.5
|
|
Subtotal non
value-added shipments
|
|
223.0
|
|
|
243.2
|
|
|
746.1
|
|
|
902.1
|
|
|
|
|
|
|
|
|
|
|
Total
shipments
|
|
1,420.0
|
|
|
1,406.1
|
|
|
5,275.9
|
|
|
5,431.3
|
|
|
|
|
|
|
|
|
|
|
Shipments by
Product (%)
|
|
|
|
|
|
|
|
|
Stainless/electrical
|
|
13.8
|
%
|
|
13.4
|
%
|
|
15.6
|
%
|
|
15.6
|
%
|
Coated
|
|
46.2
|
%
|
|
46.6
|
%
|
|
46.8
|
%
|
|
44.4
|
%
|
Cold-rolled
|
|
22.2
|
%
|
|
20.6
|
%
|
|
21.2
|
%
|
|
21.0
|
%
|
Tubular
|
|
2.1
|
%
|
|
2.0
|
%
|
|
2.3
|
%
|
|
2.4
|
%
|
Subtotal
value-added shipments
|
|
84.3
|
%
|
|
82.6
|
%
|
|
85.9
|
%
|
|
83.4
|
%
|
|
|
|
|
|
|
|
|
|
Hot-rolled
|
|
13.8
|
%
|
|
15.2
|
%
|
|
12.2
|
%
|
|
14.1
|
%
|
Secondary
|
|
1.9
|
%
|
|
2.2
|
%
|
|
1.9
|
%
|
|
2.5
|
%
|
Subtotal non
value-added shipments
|
|
15.7
|
%
|
|
17.4
|
%
|
|
14.1
|
%
|
|
16.6
|
%
|
|
|
|
|
|
|
|
|
|
Total
shipments
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
SOURCE AK Steel