Investments in Affiliates

The Company has investments in several businesses accounted for using the equity method of accounting. Cost of products sold includes $1.8 and $2.9 for the three months ended June 30, 2015 and 2014, respectively, and $3.6 and $5.1 for the six months ended June 30, 2015 and 2014, respectively, for the Company’s share of income of equity investees other than Magnetation LLC (“Magnetation”). The Company’s share of income (loss) related to Magnetation is included in other income (expense) and was $(2.5) for the three months ended June 30, 2014, and $(16.3) and $(3.8) for the six months ended June 30, 2015 and 2014, respectively. The results of operations for the three months ended June 30, 2015, do not include any losses of Magnetation as the basis in the Magnetation investment had been reduced to zero as of March 31, 2015 and AK Steel has no further investment commitments to Magnetation.

Summarized financial statement data for all investees is presented below. The financial results for acquired joint ventures are only included for the period since the acquisition and the financial results for Magnetation are only included through March 31, 2015 since it is unlikely that AK Steel will retain its equity interest as a result of Magnetation’s bankruptcy.



	Three Months Ended				Six Months Ended
	June 30, 2015				June 30, 2015
	2015		2014		2015			2014
Revenue	$	76.4	$	85.3	$	208.0		$	157.7
Gross profit	21.4		23.6		28.3			48.1
Net income (loss)	5.8		5.0		(18.8		)	10.5

Magnetation

As of March 31, 2015, the Company concluded that its 49.9% equity interest in Magnetation was fully impaired and therefore recorded a non-cash impairment charge of $256.3 for the quarter ended March 31, 2015. Key factors that affected the Company’s conclusion that an other-than-temporary impairment had occurred as of March 31, 2015, included (i) the significant market decline in global iron ore pellet pricing during the first quarter of 2015 and resulting negative cash flow effects on Magnetation’s results; (ii) a less favorable longer-term forecast of iron ore prices and resulting cash flow outlook for Magnetation; (iii) the likely loss of the Company’s equity interest in Magnetation in the event of a bankruptcy filing; and (iv) Magnetation’s existing capital structure and the inability of Magnetation to raise additional capital from third parties or the equity holders. Prior to March 31, 2015, the Company believed that the fair value of the Company’s interest in Magnetation exceeded its carrying amount and that despite near-term temporary pressures on liquidity, long-term cash flow projections of Magnetation were sufficient to allow the Company to recover its investment in Magnetation. During the quarter ended March 31, 2015, the near-term liquidity issues faced by Magnetation intensified due to a combination of an approximate 20% decline in the daily IODEX index and substantially lower IODEX futures pricing toward the end of the quarter, a slower-than-expected ramp-up of operations of the pellet plant and resulting lower sales levels, payments due for construction overruns on the pellet and third concentrate plants, and higher-than-expected start-up and operating costs. Although Magnetation accomplished several actions in late 2014 and early 2015 to increase its liquidity, such liquidity enhancements and other cost reduction initiatives did not increase liquidity sufficiently in light of the significant market decline in iron ore pricing during the first quarter of 2015. Based on the outlook for iron ore prices at March 31, 2015, the Company concluded that prices could remain suppressed for the near future and that, if this outlook were accurate, it raised questions about the ability of Magnetation to operate profitably. In March 2015, Magnetation began discussions with certain debt holders in order to seek a solution to its liquidity issues. AK Steel also participated in those discussions but no acceptable restructuring was agreed upon. On May 5, 2015, Magnetation and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Minnesota. Magnetation’s outstanding indebtedness is non-recourse to AK Steel. The Company is not required to make any additional capital contributions or other future investments in Magnetation and has not guaranteed any obligations of Magnetation. Because the Company considers it unlikely that it will retain its equity interest in Magnetation as a result of Magnetation’s bankruptcy, it does not expect to record any further impact in its financial statements from its equity investment in Magnetation.