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Supplementary Financial Statement Information (Notes)
 3 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Supplementary Financial Statement Information Supplementary Financial Statement Information
 

Revenue

Net sales by market are presented below:
 
Three Months Ended March 31,
 
2018
 
2017
Automotive
$
1,119.1

 
$
1,029.5

Infrastructure and Manufacturing
241.3

 
229.6

Distributors and Converters
298.5

 
274.3

Total
$
1,658.9

 
$
1,533.4


Net sales by product line are presented below:
 
Three Months Ended March 31,
 
2018
 
2017
Carbon steel
$
1,068.6

 
$
1,029.2

Stainless and electrical steel
426.1

 
433.9

Tubular products, components and other
164.2

 
70.3

Total
$
1,658.9

 
$
1,533.4



We sell domestically to customers located primarily in the Midwestern and Eastern United States and to foreign customers, primarily in Canada, Mexico and Western Europe. Net sales to customers located outside the United States totaled $167.8 and $155.1 for the three months ended March 31, 2018 and 2017.

Inventory

Inventories as of March 31, 2018 and December 31, 2017, are presented below:
 
March 31,
2018
 
December 31,
2017
Finished and semi-finished
$
972.5

 
$
996.8

Raw materials
361.5

 
388.2

Inventory
$
1,334.0

 
$
1,385.0



In the first quarter of 2018, we changed our accounting method for valuing certain inventories from the last-in, first-out (LIFO) method to the average cost method. This method values inventory using average costs for materials and most recent production costs for labor and overhead. We believe that using the average cost method is preferable since it improves comparability with our peers, more closely tracks the physical flow of our inventory, better matches revenue with expenses and aligns with how we internally manage our business.

The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to all periods presented. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in our condensed consolidated balance sheet as of December 31, 2017 and our condensed consolidated statements of operations and comprehensive income (loss) and cash flows for the three months ended March 31, 2017 were adjusted as follows:
 
As Originally Reported
 
Effect of Change
 
As Adjusted
Condensed consolidated statement of operations for the three months ended March 31, 2017:
 
 
 
 
 
Cost of products sold (a)
$
1,312.2

 
$
(35.3
)
 
$
1,276.9

Income tax expense (benefit)
(13.4
)
 
13.4

 
—

Net income
78.7

 
21.9

 
100.6

Net income attributable to AK Steel Holding Corporation
62.5

 
21.9

 
84.4

Net income per share attributable to AK Steel Holding Corporation common stockholders:
 
 

 
 
Basic
$
0.20

 
$
0.07

 
$
0.27

Diluted
0.19

 
0.07

 
0.26

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the three months ended March 31, 2017:
 
 
 
 
 
Cash flow hedges—Reclassification of losses (gains) to net income (loss)
$
(3.2
)
 
$
2.6

 
$
(0.6
)
Comprehensive income
56.0

 
24.5

 
80.5

Comprehensive income attributable to AK Steel Holding Corporation
39.8

 
24.5

 
64.3

 
 
 
 
 
 
Condensed consolidated balance sheet as of December 31, 2017:
 
 
 
 
 
Inventory
$
1,147.8

 
$
237.2

 
$
1,385.0

Other non-current assets
476.0

 
(58.5
)
 
417.5

Other non-current liabilities
161.6

 
7.3

 
168.9

Accumulated deficit
(3,058.6
)
 
181.6

 
(2,877.0
)
Accumulated other comprehensive loss
(40.0
)
 
(10.2
)
 
(50.2
)
 
 
 
 
 
 
Condensed consolidated statement of cash flows for the three months ended March 31, 2017:
 
 
 
 
 
Net income
$
78.7

 
$
21.9

 
$
100.6

Deferred income taxes
(11.9
)
 
13.4

 
1.5

Changes in working capital
(54.6
)
 
(37.9
)
 
(92.5
)
Other operating items, net
(10.6
)
 
2.6

 
(8.0
)
(a)
Cost of products sold as originally reported reflects the change in presentation of pension and OPEB (income) expense further described in Note 1.

The following table shows the effects of the change in accounting principle from LIFO to average cost as of March 31, 2018 and for the three months ended March 31, 2018:
 
As Computed under LIFO
 
As Reported under Average Cost
 
Effect of Change
Condensed consolidated statement of operations for the three months ended March 31, 2018:
 
 
 
 
 
Cost of products sold
$
1,478.9

 
$
1,463.7

 
$
(15.2
)
Income tax expense (benefit)
(8.2
)
 
(4.9
)
 
3.3

Net income
32.9

 
44.8

 
11.9

Net income attributable to AK Steel Holding Corporation
16.8

 
28.7

 
11.9

Net income per share attributable to AK Steel Holding Corporation common stockholders:
 
 
 
 
 
Basic
$
0.05

 
$
0.09

 
$
0.04

Diluted
0.05

 
0.09

 
0.04

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the three months ended March 31, 2018:
 
 
 
 
 
Cash flow hedges—Reclassification of losses (gains) to net income (loss)
$
(5.9
)
 
$
(7.6
)
 
$
(1.7
)
Comprehensive income
27.9

 
38.1

 
10.2

Comprehensive income attributable to AK Steel Holding Corporation
11.8

 
22.0

 
10.2

 
 
 
 
 
 
Condensed consolidated balance sheet as of March 31, 2018:
 
 
 
 
 
Inventory
$
1,083.3

 
$
1,334.0

 
$
250.7

Other non-current assets
479.1

 
412.0

 
(67.1
)
Other non-current liabilities
148.9

 
150.9

 
2.0

Accumulated deficit
(3,042.6
)
 
(2,849.1
)
 
193.5

Accumulated other comprehensive loss
(44.2
)
 
(56.1
)
 
(11.9
)
 
 
 
 
 
 
Condensed consolidated statement of cash flows for the three months ended March 31, 2018:
 
 
 
 
 
Net income
$
32.9

 
$
44.8

 
$
11.9

Deferred income taxes
(10.1
)
 
(6.8
)
 
3.3

Changes in working capital
13.7

 
0.2

 
(13.5
)
Other operating items, net
(11.6
)
 
(13.3
)
 
(1.7
)


Other Non-Current Assets

The change in goodwill for the three months ended March 31, 2018, was as follows.
 
2018
Balance at December 31, 2017
$
253.8

Adjustment to acquisition purchase price
1.2

Balance at March 31, 2018
$
255.0


Intangible assets at March 31, 2018, consist of:
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Customer relationships
$
36.6

 
$
(3.5
)
 
$
33.1

Technology
19.3

 
(2.1
)
 
17.2

Other
1.0

 
(0.6
)
 
0.4

Intangible assets
$
56.9

 
$
(6.2
)
 
$
50.7


Intangible assets at December 31, 2017, consist of:
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Customer relationships
$
36.6

 
$
(2.2
)
 
$
34.4

Technology
19.3

 
(1.4
)
 
17.9

Other
1.0

 
(0.4
)
 
0.6

Intangible assets
$
56.9

 
$
(4.0
)
 
$
52.9



Amortization expense related to intangible assets was $2.4 for the three months ended March 31, 2018.

Investments in Affiliates

We have investments in several businesses accounted for using the equity method of accounting. Cost of products sold includes $1.3 and $3.4 for the three months ended March 31, 2018 and 2017, for our share of income of equity investees.

Summarized financial statement data for all investees is presented below.
 
 
Three Months Ended March 31,
 
 
2018
 
2017
Revenue
 
$
74.8

 
$
72.5

Gross profit
 
21.1

 
25.5

Net income
 
4.2

 
8.9



Facility Idling

In the fourth quarter of 2015, we temporarily idled the Ashland Works blast furnace and steelmaking operations (“Ashland Works Hot End”). We incurred on-going costs of $5.4 and $5.6 for the three months ended March 31, 2018 and 2017, for maintenance of the equipment, utilities and supplier obligations related to the Ashland Works Hot End.

We continue to engage in regular reviews of the potential viability of the Ashland Works Hot End, including an assessment of the most significant risks and benefits of a permanent idling of those idled operations. As part of these reviews, we take into consideration, among other items, our strategic focus on reducing participation in commodity markets to position the company for sustainable profitability and whether we anticipate that future market conditions will enable production from the Ashland Works Hot End to generate sustainable economic returns through steel market cycles. The Ashland Works Hot End remains on temporary idle based on our assessment of forecasted supply and demand characteristics of the markets that we
serve. No final determination has been made at this time regarding the long-term status of the operations. Factors that we continue to assess in relation to our decision on the long-term status of the Ashland Works Hot End include, among other items, an uncertain global trade landscape influenced by shifting domestic and international political priorities, continued intense competition from both domestic and foreign steel competitors, excess global steel capacity, volatile raw material costs and steel prices, and our cost structure relative to other sources of steel production. If we decide to permanently idle the Ashland Works Hot End, we would incur certain cash expenses, including those relating to labor benefit obligations, certain take-or-pay supply agreements and potentially accelerated environmental remediation costs.