AK Steel 2000 Annual Meeting; Text of the Chairman's Message
16 May 2000
AK Steel 2000 Annual Meeting; Text of the Chairman's Message
WILMINGTON, Del.--May 15, 2000--AK Steel held its annual shareholders meeting here this morning, which was attended by approximately 20 shareholders. The company released the following text of the message delivered at the meeting by Richard M. Wardrop, Jr., chairman and chief executive officer of AK Steel."It is my pleasure to report that your company continues on a path of outstanding performance. In the first quarter of 2000, our solid financial performance continued with record quarterly revenues of 1.14 billion dollars and net income of 26.5 million dollars, or 24 cents per diluted share. That performance beat Wall Street's expectations by a good 5 cents per share.
Our 49 dollars per ton operating profit was better than 4 times the average of our competitors, and was driven by a solid 89% rate of value-added shipments. Our strategic focus remains unchanged...building the richest product mix with the highest margins, achieving the lowest costs and delivering great quality and service.
All of these things we do with one objective...to enhance the value of your company. In support of that objective, I am pleased to report that our board of directors last month approved our third 100 million dollar share repurchase program. This program enables AK Steel to repurchase, from time to time, shares of either its outstanding common stock, or its outstanding preferred stock. At today's share price levels, we will be aggressive in our share buyback while remaining compliant with our debt covenants. And I am proud to report that AK Steel this year vaulted onto the prestigious Fortune 500 list, and was again named to Fortune's Most Admired Companies list.
Now let me take this opportunity to present a brief summary of our 1999 full-year results. 1999 brought dramatic and positive change to AK Steel, but 2 events really shaped the year. First, construction of Rockport Works was completed in 1999, less than 3 years following the start of the project. Although Rockport Works began operating way back in 1998 with the completion of the continuous galvanizing line, last fall the final piece, the carbon continuous pickling line, was commissioned.
We are very pleased that Rockport's galvanizing line has already demonstrated that it is capable of exceeding its nameplate capacity. And the quality off the line is outstanding. The other units are ramping up very nicely, proving Rockport Works to be the powerhouse it was designed to be.
The second major event that shaped AK Steel in 1999 was our acquisition of Armco on September 30th. We believe the merger of these two great organizations creates a product and marketing mix unlike any in the history of the domestic steel business. The result, in our opinion, is a company strategically positioned for the future well beyond 2000.
In 1999 AK Steel maintained its industry-leading position in safety with a Total Recordable Injury Frequency of 1.63, an improvement of more than 9% over the previous year. That mark gave AK Steel an injury rate about one-fifth that of the carbon steel industry.
The safety performance of the former Armco plants is also considered the best in specialty. For example, the Butler Works was honored with the Pennsylvania Governor's Award for Safety Excellence in 1999. Yet, we believe instilling AK Steel's commitment and accountability will yield improvements in these solid safety programs as well.
Those who know AK Steel know that quality is second only to safety. I'm proud to say that our commitment continues to pay dividends, as General Motors, our largest customer, bestowed their Supplier of the Year honors on AK Steel last year. We also won dual awards from Toyota. This makes 6 consecutive years of dual awards from Toyota, and that is an unprecedented feat in any industry. Our record of 100% on-time delivery and zero defects for one year brought a supplier excellence award from Arvin Industries, a leading automotive supplier. General Electric recognized AK Steel with quality awards for both carbon and electrical steels.
And I am extremely pleased that each of our specialty steel plants received a flawless QS-9000 audit in March, an outstanding achievement.
Let me conclude by saying that I believe the most important news for shareholders, is our record of leading the U.S. steel industry for 6 consecutive years in operating profit per ton. 1999 was an outstanding year for AK Steel. The gap between AK Steel's operating profit, and that of our peer group, widened to nearly $70 per ton.
On a merged basis for 1999, AK Steel shipped 6.5 million tons, resulting in revenues of 4.3 billion dollars. Net income was 172.8 million dollars, or $1.59 per diluted share of common stock, before merger-related costs and special charges.
That concludes our business update, thank you for your attendance."