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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2004

OR

For the transition period from              to             

Commission File No. 1-13696

AK STEEL HOLDING CORPORATION

(Exact name of registrant as specified in its charter)

(513) 425-5000

(Registrant’s telephone number, including area code)

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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

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.

108,762,954 shares of common stock

(as of August 5, 2004)

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AK STEEL HOLDING CORPORATION

INDEX

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PART I. FINANCIAL INFORMATION

AK STEEL HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions, except per share data)

See notes to consolidated financial statements.

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AK STEEL HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in millions)

See notes to consolidated financial statements.

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AK STEEL HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

See notes to consolidated financial statements.

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AK STEEL HOLDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data)

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 consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 30, 2004, the results of its operations for the three and six-month periods ended June 30, 2004 and 2003, and cash flows for the six-month periods ended June 30, 2004 and 2003. The results of operations for the six months ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2003.

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.

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Net periodic benefit costs for pension and other postretirement benefits were as follows:

The increase in pension net periodic benefit cost for the six months ended June 30, 2004 was due primarily to recognition of settlement, curtailment and increased actuarial losses related to the early retirement of participants in the Company’s non-qualified pension plan. The Company expects the total contribution to be approximately $45.0 and $140.0 for its pension plans and other postretirement plans, respectively, in 2004.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 provides a federal subsidy to sponsors of retiree healthcare benefit plans that include a qualified prescription drug benefit. The Company sponsors such a plan. Because its benefit plan’s measurement date preceded the effective date of the Act, the Company was not permitted to recognize the effects of the Act until February 8, 2004. The Company expects that savings in per capita prescription claim costs due to the impact of the Act will result in a reduction in the Company’s accumulated postretirement benefit obligation of approximately $140.0. These savings are included in unrecognized actuarial net gains and losses and will be recognized into income over future periods. In 2004, the Company expects to recognize a reduction in net periodic benefit costs related to these savings of approximately $17.0, excluding any possible fourth quarter corridor adjustment.

Under its method of accounting for pension and other postretirement benefit plans, the Company recognizes into income (loss), as a fourth quarter adjustment, any unrecognized actuarial gains and losses that exceed 10% of the larger of projected benefit obligations or plan assets. Prevailing interest rates on the fourth quarter measurement date are one of the factors used to determine the Company’s year-end liability, fourth quarter corridor charge and subsequent year’s expense for these benefit plans. At this time, because factors influencing the determination of plan liabilities and expenses are likely to change, the Company cannot reasonably estimate the amount of a fourth quarter charge, if one is necessary.

Common stock compensation expense related to restricted stock awards granted under the Company’s Stock Incentive Plan (“SIP”) was $3.1 and $1.3 for the three-month periods ended June 30, 2004 and 2003, respectively, and $5.1 and $2.9 for the six-month periods ended June 30, 2004 and 2003, respectively. The Company uses the intrinsic value method to account for nonqualified stock options granted under the SIP. Had compensation expense for the Company’s stock option plans been determined based on the fair value method, the Company’s net income (loss) and basic and diluted income (loss) per share would have been adjusted as follows:

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On May 21, 2004, the Company completed the early redemption of the remaining $62.5 principal amount of its Senior Secured Notes due December 2004. In the three and six months ended June 30, 2004, the Company recognized a $2.9 charge, which was included in income (loss) from continuing operations, related to the early redemption.

On May 27, 2004, a subsidiary of the Company entered into a $300.0, three-year revolving credit facility with a syndicate of lenders expiring on May 27, 2007. The facility is secured by trade receivables, which the subsidiary purchases from AK Steel. The new facility also includes an option of two one-year renewals and replaces an existing accounts receivable credit facility that was to expire on September 30, 2004.

On June 17, 2004, the Company completed a $62.0 industrial revenue bond offering issued through the Ohio Air Quality Development Authority. The bonds have a floating interest rate, currently averaging 1.2%, and will mature on June 1, 2024. Proceeds from the offering will be used to finance construction of emission control equipment for the Middletown Works’ blast furnace and basic oxygen furnaces. The equipment is necessary to comply with recently established standards under the Clean Air Act. The net proceeds of $61.7 from the bond offering are held in a restricted trust and drawn as the Company makes qualifying expenditures. The Company has drawn $6.3 from the trust and, at June 30, 2004, the remaining funds of the bond offering of $55.4 are included in other noncurrent assets.

During the quarter ended June 30, 2004, the Company’s forecasted 2004 taxable income increased over the amounts previously estimated, due primarily to improved financial performance in continuing operations. As a result, the Company expects to use net operating loss carryforwards that were previously expected to expire unused which had been reduced by deferred tax valuation allowances recorded in prior years.

The utilization of these available net operating loss carryforwards will completely offset the provision for federal income taxes that would otherwise be payable on the gain from the sale of Douglas Dynamics, L.L.C. and Greens Port Industrial Park during the first and second quarters, respectively, and the income from those two discontinued operations during the first half of 2004 prior to their sale. As a result, an effective tax rate of approximately 3% has been applied, which is solely attributable to current and deferred state income taxes.

In addition, in the first half of 2004, the Company recorded an income tax benefit of $3.0 on income from continuing operations. Of this total benefit, approximately $3.2 is attributable to the utilization of the additional net operating loss carryforwards, partially offset by $0.2 of income tax expense.

Taxes on continuing and discontinued operations recorded through June 30, 2004 have been estimated based on year-to-date income and projected results for the second half of the year. The final effective tax rate to be applied to continuing and discontinued operations for 2004 will depend on the actual amount of taxable income generated by the Company for the full year and the amount of net operating loss carryforwards that ultimately will be utilized to offset that income.

On March 31, 2004, the Company sold Douglas Dynamics, L.L.C. for $264.0, before fees and expenses, and recognized a pre-tax gain of $208.3 ($202.1, after tax, or $1.86 per share) in the first six months. During the second quarter, the after tax gain increased by $27.2 as a result of the lower tax rate (see Note 7). On

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April 9, 2004, the Company sold Greens Port Industrial Park for $75.0, before fees and expenses, and recognized a pre-tax gain of approximately $45.5 ($44.2, after tax, or $0.41 per share) in the second quarter of 2004. Both businesses were accounted for as discontinued operations. During the second quarter of 2004, the tax rate applied to book income and the gain on sale of these discontinued operations was reduced to approximately 3%, resulting in an increase in the Douglas Dynamics’ after tax gain and net income in the quarter. Results of these discontinued operations for the three and six months ended June 30, 2004 and 2003 included the following:

Comprehensive income (loss), net of tax, is as follows:

A 40% deferred tax rate is applied to derivative instrument hedges and unrealized gains and losses.

Accumulated other comprehensive loss is as follows:

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The following are updates to the Company’s descriptions of pending legal proceedings and environmental matters reported in its Annual Report on Form 10-K for the calendar year 2003 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004:

As previously reported, in April 2000 an action was filed in the United States District Court for the Southern District of Ohio by Bernard Fidel and others against the Company and certain of its directors and officers. The plaintiffs alleged material misstatements and omissions in the Company’s public disclosure about its business and operations. It previously was reported that the parties had entered into a settlement agreement which was subject to court approval. The Court subsequently approved the settlement agreement and, on July 12, 2004, entered a Final Judgment and Order of Dismissal with Prejudice in the case. As a result of the settlement and dismissal, all claims against the Company and its directors and officers relating to this matter have been resolved.

As previously reported, federal regulations promulgated pursuant to the Clean Water Act impose categorical pretreatment limits on the concentrations of various constituents in coke plant wastewater prior to discharge into publicly owned treatment works (“POTW”). Due to concentrations of ammonia and phenol in excess of these limits in wastewater from the Middletown Works, AK Steel, through the Middletown POTW, petitioned the EPA for “removal credits,” a type of compliance exemption, based on the Middletown POTW’s satisfactory treatment of the wastewater for ammonia and phenol. The EPA declined to review the petition on the grounds that it had not yet promulgated new sludge management rules. AK Steel thereupon sought and obtained from the United States District Court for the Southern District of Ohio an injunction prohibiting the EPA from instituting enforcement action against AK Steel for noncompliance with the pretreatment limitations, pending the EPA’s promulgation of the applicable sludge management regulations. Although the EPA has not yet promulgated the new sludge management rules, it has promulgated new pretreatment and effluent guidelines for the Iron & Steel industry with an effective date of October 17, 2005. These new rules will no longer require pretreatment limitations for ammonia and phenol. The Company believes that these new rules effectively preclude an enforcement action by the EPA against the Company for noncompliance with the pretreatment limitations. The Company and the EPA filed a joint stipulation of dismissal with the Court on April 2, 2004.

As previously reported, on April 18, 2003, the Department of Justice, on behalf of the EPA, issued a notice with respect to AK Steel’s Butler Works alleging certain noncompliance issues discovered during a multi-media inspection by EPA Region III and the Commonwealth of Pennsylvania in June and August 2000. The notice alleges that AK Steel failed to properly handle electric arc furnace dust in violation of RCRA Section 3005(a), 42 U.S.C. § 6925(a) and RCRA Section 3004, 42 U.S.C. § 6924, failed to properly repair and operate refrigeration equipment in violation of Section 608 of the Clean Air Act, 42 U.S.C. § 7671g, did not have a proper National Pollutant Discharge Elimination System permit for a stormwater outfall and failed to comply with certain RCRA inspection and training requirements. In May 2004, AK Steel and the EPA reached a tentative settlement on all issues. The settlement is subject to finalizing a consent decree satisfactory to both parties and includes a civil penalty of $1.2, of which $0.3 will be paid in cash and the balance through supplemental environmental projects.