Supplementary Guarantor Information (Notes)

6 Months Ended

Jun. 30, 2017

Supplemental Guarantor Information [Abstract]

AK Steel’s 7.50% Senior Secured Notes due 2023, 7.625% Senior Notes due 2021, 8.375% Senior Notes due 2022 and 7.00% Senior Notes due 2027 (collectively, the “Senior Notes”) and Exchangeable Notes are governed by indentures entered into by AK Holding and its 100%-owned subsidiary, AK Steel. Under the terms of the indentures, AK Holding and the Guarantor Subsidiaries each fully and unconditionally, jointly and severally, guarantee the payment of interest, principal and premium, if any, on each of the notes included in the Senior Notes.

Under the terms of the indenture for the Exchangeable Notes, AK Holding fully and unconditionally, jointly and severally, guarantees the payment of interest, principal and premium, if any, on the Exchangeable Notes.

We present all investments in subsidiaries in the supplementary guarantor information using the equity method of accounting. Therefore, the net income (loss) of the subsidiaries accounted for using the equity method is in their parents’ investment accounts. The principal elimination entries eliminate investments in subsidiaries and inter-company balances and transactions. The following supplementary condensed consolidating financial statements present information about AK Holding, AK Steel, the Guarantor Subsidiaries of the Senior Notes and the other non-guarantor subsidiaries.



Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2017

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes		Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
Net sales	$	—		$	1,498.4		$	74.1	$	97.9		$	(113.2	)	$	1,557.2
Cost of products sold (exclusive of items shown separately below)	—			1,321.7			53.2		71.1			(102.3		)	1,343.7
Selling and administrative expenses (exclusive of items shown separately below)	1.0			67.8			3.2		4.8			(11.7		)	65.1
Depreciation	—			46.9			2.1		6.1			—			55.1
Pension and OPEB expense (income)	—			(16.2		)	—		—			—			(16.2		)
Total operating costs	1.0			1,420.2			58.5		82.0			(114.0		)	1,447.7
Operating profit (loss)	(1.0		)	78.2			15.6		15.9			0.8			109.5
Interest expense	—			37.9			—		0.3			—			38.2
Other income (expense)	—			(7.8		)	2.8		1.4			—			(3.6		)
Income (loss) before income taxes	(1.0		)	32.5			18.4		17.0			0.8			67.7
Income tax expense (benefit)	—			(16.6		)	7.0		0.6			0.3			(8.7		)
Equity in net income (loss) of subsidiaries	62.2			13.1			—		(0.2		)	(75.1		)	—
Net income (loss)	61.2			62.2			11.4		16.2			(74.6		)	76.4
Less: Net income attributable to noncontrolling interests	—			—			—		15.2			—			15.2
Net income (loss) attributable to AK Steel Holding Corporation	61.2			62.2			11.4		1.0			(74.6		)	61.2
Other comprehensive income (loss)	(19.9		)	(19.9		)	—		2.3			17.6			(19.9		)
Comprehensive income (loss) attributable to AK Steel Holding Corporation	$	41.3		$	42.3		$	11.4	$	3.3		$	(57.0	)	$	41.3



Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2016

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes		Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
Net sales	$	—		$	1,436.8		$	64.4	$	104.3		$	(113.3	)	$	1,492.2
Cost of products sold (exclusive of items shown separately below)	—			1,305.5			45.6		75.7			(101.8		)	1,325.0
Selling and administrative expenses (exclusive of items shown separately below)	1.4			62.7			3.2		5.8			(10.9		)	62.2
Depreciation	—			46.9			1.9		5.5			—			54.3
Pension and OPEB expense (income)	—			(11.9		)	—		—			—			(11.9		)
Total operating costs	1.4			1,403.2			50.7		87.0			(112.7		)	1,429.6
Operating profit (loss)	(1.4		)	33.6			13.7		17.3			(0.6		)	62.6
Interest expense	—			41.1			—		0.3			—			41.4
Other income (expense)	—			(5.1		)	2.0		5.2			—			2.1
Income (loss) before income taxes	(1.4		)	(12.6		)	15.7		22.2			(0.6		)	23.3
Income tax expense (benefit)	—			(18.6		)	6.0		2.2			(0.2		)	(10.6		)
Equity in net income (loss) of subsidiaries	18.7			12.7			—		—			(31.4		)	—
Net income (loss)	17.3			18.7			9.7		20.0			(31.8		)	33.9
Less: Net income attributable to noncontrolling interests	—			—			—		16.6			—			16.6
Net income (loss) attributable to AK Steel Holding Corporation	17.3			18.7			9.7		3.4			(31.8		)	17.3
Other comprehensive income (loss)	42.4			42.4			—		(1.1		)	(41.3		)	42.4
Comprehensive income (loss) attributable to AK Steel Holding Corporation	$	59.7		$	61.1		$	9.7	$	2.3		$	(73.1	)	$	59.7




Condensed Consolidated Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2017

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes		Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
Net sales	$	—		$	2,972.0		$	146.4	$	189.3		$	(217.1	)	$	3,090.6
Cost of products sold (exclusive of items shown separately below)	—			2,608.2			105.1		133.9			(192.7		)	2,654.5
Selling and administrative expenses (exclusive of items shown separately below)	2.4			140.1			6.4		10.3			(22.9		)	136.3
Depreciation	—			94.1			4.1		12.0			—			110.2
Pension and OPEB expense (income)	—			(32.4		)	—		—			—			(32.4		)
Total operating costs	2.4			2,810.0			115.6		156.2			(215.6		)	2,868.6
Operating profit (loss)	(2.4		)	162.0			30.8		33.1			(1.5		)	222.0
Interest expense	—			76.9			—		0.7			—			77.6
Other income (expense)	—			(19.2		)	5.2		2.6			—			(11.4		)
Income (loss) before income taxes	(2.4		)	65.9			36.0		35.0			(1.5		)	133.0
Income tax expense (benefit)	—			(36.5		)	13.7		1.3			(0.6		)	(22.1		)
Equity in net income (loss) of subsidiaries	126.1			23.7			—		(0.1		)	(149.7		)	—
Net income (loss)	123.7			126.1			22.3		33.6			(150.6		)	155.1
Less: Net income attributable to noncontrolling interests	—			—			—		31.4			—			31.4
Net income (loss) attributable to AK Steel Holding Corporation	123.7			126.1			22.3		2.2			(150.6		)	123.7
Other comprehensive income (loss)	(42.6		)	(42.6		)	—		2.6			40.0			(42.6		)
Comprehensive income (loss) attributable to AK Steel Holding Corporation	$	81.1		$	83.5		$	22.3	$	4.8		$	(110.6	)	$	81.1




Condensed Consolidated Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2016

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Company
Net sales	$	—		$	2,905.0		$	125.9	$	219.6	$	(239.5	)	$	3,011.0
Cost of products sold (exclusive of items shown separately below)	—			2,656.8			86.1		162.7		(215.1		)	2,690.5
Selling and administrative expenses (exclusive of items shown separately below)	2.7			127.2			6.6		11.5		(22.3		)	125.7
Depreciation	—			93.3			3.9		10.8		—			108.0
Pension and OPEB expense (income)	—			(23.8		)	—		—		—			(23.8		)
Total operating costs	2.7			2,853.5			96.6		185.0		(237.4		)	2,900.4
Operating profit (loss)	(2.7		)	51.5			29.3		34.6		(2.1		)	110.6
Interest expense	—			83.4			—		0.8		—			84.2
Other income (expense)	—			(9.2		)	4.0		6.6		—			1.4
Income (loss) before income taxes	(2.7		)	(41.1		)	33.3		40.4		(2.1		)	27.8
Income tax expense (benefit)	—			(24.7		)	12.7		2.3		(0.8		)	(10.5		)
Equity in net income (loss) of subsidiaries	6.4			22.8			—		0.1		(29.3		)	—
Net income (loss)	3.7			6.4			20.6		38.2		(30.6		)	38.3
Less: Net income attributable to noncontrolling interests	—			—			—		34.6		—			34.6
Net income (loss) attributable to AK Steel Holding Corporation	3.7			6.4			20.6		3.6		(30.6		)	3.7
Other comprehensive income (loss)	41.4			41.4			—		0.4		(41.8		)	41.4
Comprehensive income (loss) attributable to AK Steel Holding Corporation	$	45.1		$	47.8		$	20.6	$	4.0	$	(72.4	)	$	45.1



Condensed Consolidated Balance Sheets
June 30, 2017

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	111.6		$	4.8		$	19.9		$	—		$	136.3
Accounts receivable, net	—			485.2			33.8			23.9			(12.0		)	530.9
Inventory, net	—			1,024.9			46.0			45.7			(13.1		)	1,103.5
Other current assets	—			79.9			0.9			2.9			—			83.7
Total current assets	—			1,701.6			85.5			92.4			(25.1		)	1,854.4
Property, plant and equipment	—			5,894.0			179.0			536.7			—			6,609.7
Accumulated depreciation	—			(4,459.0		)	(91.4		)	(113.1		)	—			(4,663.5		)
Property, plant and equipment, net	—			1,435.0			87.6			423.6			—			1,946.2
Investment in subsidiaries	(3,186.2		)	1,458.0			—			67.4			1,660.8			—
Inter-company accounts	3,019.4			(4,149.8		)	1,504.3			(455.3		)	81.4			—
Other non-current assets	—			130.1			33.0			41.9			—			205.0
TOTAL ASSETS	$	(166.8	)	$	574.9		$	1,710.4		$	170.0		$	1,717.1		$	4,005.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—		$	638.6		$	15.6		$	21.7		$	(3.1	)	$	672.8
Accrued liabilities	—			193.7			6.2			13.0			—			212.9
Current portion of pension and other postretirement benefit obligations	—			41.0			—			0.3			—			41.3
Total current liabilities	—			873.3			21.8			35.0			(3.1		)	927.0
Non-current liabilities:
Long-term debt	—			1,689.7			—			—			—			1,689.7
Pension and other postretirement benefit obligations	—			1,053.6			—			3.5			—			1,057.1
Other non-current liabilities	—			144.5			1.5			0.2			—			146.2
TOTAL LIABILITIES	—			3,761.1			23.3			38.7			(3.1		)	3,820.0
Equity:
Total stockholders’ equity (deficit)	(166.8		)	(3,186.2		)	1,687.1			(221.1		)	1,720.2			(166.8		)
Noncontrolling interests	—			—			—			352.4			—			352.4
TOTAL EQUITY	(166.8		)	(3,186.2		)	1,687.1			131.3			1,720.2			185.6
TOTAL LIABILITIES AND EQUITY	$	(166.8	)	$	574.9		$	1,710.4		$	170.0		$	1,717.1		$	4,005.6



Condensed Consolidated Balance Sheets
December 31, 2016

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	147.9		$	4.4		$	20.9		$	—		$	173.2
Accounts receivable, net	—			400.4			30.3			19.6			(8.3		)	442.0
Inventory, net	—			1,038.1			45.3			42.0			(11.5		)	1,113.9
Other current assets	—			91.5			0.2			2.9			—			94.6
Total current assets	—			1,677.9			80.2			85.4			(19.8		)	1,823.7
Property, plant and equipment	—			5,857.9			175.9			535.2			—			6,569.0
Accumulated depreciation	—			(4,365.8		)	(87.2		)	(101.6		)	—			(4,554.6		)
Property, plant and equipment, net	—			1,492.1			88.7			433.6			—			2,014.4
Investment in subsidiaries	(3,227.1		)	1,406.2			—			67.5			1,753.4			—
Inter-company accounts	2,954.9			(4,041.9		)	1,464.0			(458.4		)	81.4			—
Other non-current assets	—			126.0			33.0			38.9			—			197.9
TOTAL ASSETS	$	(272.2	)	$	660.3		$	1,665.9		$	167.0		$	1,815.0		$	4,036.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—		$	557.7		$	16.7		$	15.0		$	0.5		$	589.9
Accrued liabilities	—			213.7			7.0			13.4			—			234.1
Current portion of pension and other postretirement benefit obligations	—			41.0			—			0.3			—			41.3
Total current liabilities	—			812.4			23.7			28.7			0.5			865.3
Non-current liabilities:
Long-term debt	—			1,816.6			—			—			—			1,816.6
Pension and other postretirement benefit obligations	—			1,090.4			—			3.3			—			1,093.7
Other non-current liabilities	—			146.7			1.6			0.1			—			148.4
TOTAL LIABILITIES	—			3,866.1			25.3			32.1			0.5			3,924.0
EXCHANGEABLE NOTES EXCHANGE FEATURE	—			21.3			—			—			—			21.3
Equity:
Total stockholders’ equity (deficit)	(272.2		)	(3,227.1		)	1,640.6			(228.0		)	1,814.5			(272.2		)
Noncontrolling interests	—			—			—			362.9			—			362.9
TOTAL EQUITY	(272.2		)	(3,227.1		)	1,640.6			134.9			1,814.5			90.7
TOTAL LIABILITIES AND EQUITY	$	(272.2	)	$	660.3		$	1,665.9		$	167.0		$	1,815.0		$	4,036.0



Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2017

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
Net cash flows from operating activities	$	(1.8	)	$	141.1		$	19.7		$	43.4		$	0.8		$	203.2
Cash flows from investing activities:
Capital investments	—			(47.9		)	(3.2		)	(1.0		)	—			(52.1		)
Other investing items, net	—			3.0			—			(0.1		)	—			2.9
Net cash flows from investing activities	—			(44.9		)	(3.2		)	(1.1		)	—			(49.2		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	—			400.0			—			—			—			400.0
Redemption of long-term debt	—			(538.2		)	—			—			—			(538.2		)
Debt issuance costs	—			(8.3		)	—			—			—			(8.3		)
Inter-company activity	4.2			14.1			(16.1		)	(1.4		)	(0.8		)	—
SunCoke Middletown distributions to noncontrolling interest owners	—			—			—			(41.9		)	—			(41.9		)
Other financing items, net	(2.4		)	(0.1		)	—			—			—			(2.5		)
Net cash flows from financing activities	1.8			(132.5		)	(16.1		)	(43.3		)	(0.8		)	(190.9		)
Net increase (decrease) in cash and cash equivalents	—			(36.3		)	0.4			(1.0		)	—			(36.9		)
Cash and equivalents, beginning of period	—			147.9			4.4			20.9			—			173.2
Cash and equivalents, end of period	$	—		$	111.6		$	4.8		$	19.9		$	—		$	136.3



Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2016

	AK Holding			AK Steel			Guarantor Subsidiaries of the Senior Notes			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Company
Net cash flows from operating activities	$	(2.0	)	$	209.8		$	23.6		$	52.1		$	(10.5	)	$	273.0
Cash flows from investing activities:
Capital investments	—			(49.0		)	(3.4		)	(1.5		)	—			(53.9		)
Cash held for retirement of debt	—			(135.4		)	—			—			—			(135.4		)
Other investing items, net	—			0.1			—			2.0			—			2.1
Net cash flows from investing activities	—			(184.3		)	(3.4		)	0.5			—			(187.2		)
Cash flows from financing activities:
Net borrowings (payments) under credit facility	—			(400.0		)	—			—			—			(400.0		)
Proceeds from issuance of long-term debt	—			380.0			—			—			—			380.0
Redemption of long-term debt	—			(259.0		)	—			—			—			(259.0		)
Proceeds from issuance of common stock	249.4			—			—			—			—			249.4
Debt issuance costs	—			(19.3		)	—			—			—			(19.3		)
Inter-company activity	(247.1		)	266.1			(21.8		)	(7.7		)	10.5			—
SunCoke Middletown distributions to noncontrolling interest owners	—			—			—			(37.0		)	—			(37.0		)
Other financing items, net	(0.3		)	—			—			—			—			(0.3		)
Net cash flows from financing activities	2.0			(32.2		)	(21.8		)	(44.7		)	10.5			(86.2		)
Net increase (decrease) in cash and cash equivalents	—			(6.7		)	(1.6		)	7.9			—			(0.4		)
Cash and equivalents, beginning of period	—			27.0			5.7			23.9			—			56.6
Cash and equivalents, end of period	$	—		$	20.3		$	4.1		$	31.8		$	—		$	56.2