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Supplementary Financial Statement Information (Notes)
 6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Supplementary Financial Statement Information Supplementary Financial Statement Information
 

Revenue

Net sales by market are presented below:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Automotive
$
1,108.7

 
$
1,007.7

 
$
2,227.8

 
$
2,037.2

Infrastructure and Manufacturing
263.8

 
249.0

 
505.1

 
478.6

Distributors and Converters
374.1

 
300.5

 
672.6

 
574.8

Total
$
1,746.6

 
$
1,557.2

 
$
3,405.5

 
$
3,090.6


Net sales by product line are presented below:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Carbon steel
$
1,102.4

 
$
1,048.1

 
$
2,171.0

 
$
2,077.3

Stainless and electrical steel
483.1

 
444.1

 
909.2

 
878.0

Tubular products, components and other
161.1

 
65.0

 
325.3

 
135.3

Total
$
1,746.6

 
$
1,557.2

 
$
3,405.5

 
$
3,090.6



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 were $172.9 and $340.7 for the three and six months ended June 30, 2018, compared to $157.7 and $312.8 for the corresponding periods in 2017.

Inventory

Inventories as of June 30, 2018 and December 31, 2017, are presented below:
 
June 30,
2018
 
December 31,
2017
Finished and semi-finished
$
987.1

 
$
996.8

Raw materials
323.9

 
388.2

Inventory
$
1,311.0

 
$
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 and cash flows for the three and six months ended June 30, 2017 were adjusted as follows:
 
As Originally Reported
 
Effect of Change
 
As Adjusted
Condensed consolidated statement of operations for the three months ended June 30, 2017:
 
 
 
 
 
Cost of products sold (a)
$
1,345.1

 
$
(25.1
)
 
$
1,320.0

Income tax expense (benefit)
(8.7
)
 
9.1

 
0.4

Net income
76.4

 
16.0

 
92.4

Net income attributable to AK Steel Holding Corporation
61.2

 
16.0

 
77.2

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

 
 
Basic
$
0.19

 
$
0.06

 
$
0.25

Diluted
0.19

 
0.05

 
0.24

 
 
 
 
 
 
Condensed consolidated statement of operations for the six months ended June 30, 2017:
 
 
 
 
 
Cost of products sold (a)
$
2,657.3

 
$
(60.4
)
 
$
2,596.9

Income tax expense (benefit)
(22.1
)
 
22.5

 
0.4

Net income
155.1

 
37.9

 
193.0

Net income attributable to AK Steel Holding Corporation
123.7

 
37.9

 
161.6

Net income per share attributable to AK Steel Holding Corporation common stockholders:
 
 
 
 
 
Basic
$
0.39

 
$
0.12

 
$
0.51

Diluted
0.38

 
0.12

 
0.50

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the three months ended June 30, 2017:
 
 
 
 
 
Cash flow hedges—Reclassification of losses (gains) to net income
$
(2.1
)
 
$
0.8

 
$
(1.3
)
Comprehensive income
56.5

 
16.8

 
73.3

Comprehensive income attributable to AK Steel Holding Corporation
41.3

 
16.8

 
58.1

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the six months ended June 30, 2017:
 
 
 
 
 
Cash flow hedges—Reclassification of losses (gains) to net income
$
(5.3
)
 
$
3.4

 
$
(1.9
)
Comprehensive income
112.5

 
41.3

 
153.8

Comprehensive income attributable to AK Steel Holding Corporation
81.1

 
41.3

 
122.4

 
 
 
 
 
 
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
)
 
As Originally Reported
 
Effect of Change
 
As Adjusted
 
 
 
 
 
 
Condensed consolidated statement of cash flows for the six months ended June 30, 2017:
 
 
 
 
 
Net income
$
155.1

 
$
37.9

 
$
193.0

Deferred income taxes
(17.9
)
 
22.5

 
4.6

Changes in working capital
6.5

 
(63.8
)
 
(57.3
)
Other operating items, net
(2.5
)
 
3.4

 
0.9

(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 June 30, 2018 and for the three and six months ended June 30, 2018:

As Computed under LIFO
 
As Reported under Average Cost
 
Effect of Change
Condensed consolidated statement of operations for the three months ended June 30, 2018:
 
 
 
 
 
Cost of products sold
$
1,526.2

 
$
1,512.7

 
$
(13.5
)
Income tax expense (benefit)
(3.8
)
 
(0.5
)
 
3.3

Net income
62.1

 
72.3

 
10.2

Net income attributable to AK Steel Holding Corporation
46.4

 
56.6

 
10.2

Net income per share attributable to AK Steel Holding Corporation common stockholders:
 
 
 
 
 
Basic
$
0.15

 
$
0.18

 
$
0.03

Diluted
0.15

 
0.18

 
0.03

 
 
 
 
 
 
Condensed consolidated statement of operations for the six months ended June 30, 2018:
 
 
 
 
 
Cost of products sold
$
3,005.1

 
$
2,976.4

 
$
(28.7
)
Income tax expense (benefit)
(12.0
)
 
(5.4
)
 
6.6

Net income
95.0

 
117.1

 
22.1

Net income attributable to AK Steel Holding Corporation
63.2

 
85.3

 
22.1

Net income per share attributable to AK Steel Holding Corporation common stockholders:
 
 
 
 
 
Basic
$
0.20

 
$
0.27

 
$
0.07

Diluted
0.20

 
0.27

 
0.07

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the three months ended June 30, 2018:
 
 
 
 
 
Comprehensive income
$
51.4

 
$
61.6

 
$
10.2

Comprehensive income attributable to AK Steel Holding Corporation
35.7

 
45.9

 
10.2

 
 
 
 
 
 
Condensed consolidated statement of comprehensive income for the six months ended June 30, 2018:
 
 
 
 
 
Comprehensive income
$
77.6

 
$
99.7

 
$
22.1

Comprehensive income attributable to AK Steel Holding Corporation
45.8

 
67.9

 
22.1

 
 
 
 
 
 
Condensed consolidated balance sheet as of June 30, 2018:
 
 
 
 
 
Inventory
$
1,046.8

 
$
1,311.0

 
$
264.2

Other non-current assets
476.1

 
405.7

 
(70.4
)
Other non-current liabilities
143.6

 
145.6

 
2.0

Accumulated deficit
(2,996.2
)
 
(2,792.5
)
 
203.7

 
 
 
 
 
 
Condensed consolidated statement of cash flows for the six months ended June 30, 2018:
 
 
 
 
 
Net income
$
95.0

 
$
117.1

 
$
22.1

Deferred income taxes
(13.8
)
 
(7.2
)
 
6.6

Changes in working capital
55.8

 
28.8

 
(27.0
)
Other operating items, net
(26.0
)
 
(27.7
)
 
(1.7
)


Other Non-Current Assets

The change in goodwill for the six months ended June 30, 2018, was as follows.
 
2018
Balance at beginning of period
$
253.8

Adjustment to acquisition purchase price
1.2

Balance at end of period
$
255.0



Intangible assets at June 30, 2018 and December 31, 2017, consist of:
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
As of June 30, 2018
 
 
 
 
 
Customer relationships
$
36.6

 
$
(4.8
)
 
$
31.8

Technology
19.3

 
(3.0
)
 
16.3

Other
1.0

 
(0.9
)
 
0.1

Intangible assets
$
56.9

 
$
(8.7
)
 
$
48.2

 
 
 
 
 
 
As of December 31, 2017
 
 
 
 
 
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 $2.3 and $4.7 for the three and six months ended June 30, 2018.

Investments in Affiliates

We have investments in several businesses accounted for using the equity method of accounting. Summarized financial statement data for all investees is presented below.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Revenue
 
$
83.5

 
$
76.8

 
$
158.3

 
$
149.3

Gross profit
 
23.6

 
23.6

 
44.7

 
49.1

Net income
 
5.1

 
6.5

 
9.3

 
15.4

 
 
 
 
 
 
 
 
 
Our share of income of equity investees (included in cost of products sold)
 
1.7

 
2.2

 
3.0

 
5.6



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 $5.0 and $5.2 for the three months ended June 30, 2018 and 2017 and $10.4 and $10.8 for the six months ended June 30, 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. The remaining carrying value of the long-lived assets is not material.