TIMKENSTEEL CORP, 10-K filed on 3/16/2017
Annual Report
Document and Entity Information Document (USD $)
12 Months Ended
Dec. 31, 2016
Feb. 28, 2017
Jun. 30, 2016
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
TimkenSteel Corporation 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Central Index Key
0001598428 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
44,370,059 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 425,406,847 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Statement [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 214.7 
$ 213.8 
$ 223.1 
$ 217.9 
$ 206.6 
$ 232.7 
$ 278.2 
$ 388.7 
$ 869.5 
$ 1,106.2 
$ 1,674.2 
Cost of products sold
 
 
 
 
 
 
 
 
896.6 
1,060.0 
1,473.1 
Gross (Loss) Profit
(44.7)
(6.2)
15.3 
8.5 
9.3 
(12.3)
2.1 
47.1 
(27.1)
46.2 
201.1 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
101.5 
105.1 
128.9 
Impairment and restructuring charges
 
 
 
 
 
 
 
 
0.3 
6.5 
1.2 
Operating (Loss) Income
 
 
 
 
 
 
 
 
(128.9)
(65.4)
71.0 
Interest expense
 
 
 
 
 
 
 
 
11.4 
3.4 
0.9 
Other expense, net
 
 
 
 
 
 
 
 
1.7 
2.9 
1.4 
(Loss) Income Before Income Taxes
 
 
 
 
 
 
 
 
(142.0)
(71.7)
68.7 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
(36.5)
(26.7)
22.6 
Net (Loss) Income
$ (67.0)
$ (22.2)
$ (6.6)
$ (9.7)
$ (13.8)
$ (24.5)
$ (18.1)
$ 11.4 
$ (105.5)
$ (45.0)
$ 46.1 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.01 
Diluted (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.00 
Dividends per share (in dollars per share)
 
 
 
 
 
 
 
 
$ 0 
$ 0.42 
$ 0.28 
Consolidated Statements of Comprehensive (Loss) Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$ (67.0)
$ (22.2)
$ (6.6)
$ (9.7)
$ (13.8)
$ (24.5)
$ (18.1)
$ 11.4 
$ (105.5)
$ (45.0)
$ 46.1 
Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
(2.0)
(1.1)
(0.3)
Pension and postretirement liability adjustments
 
 
 
 
 
 
 
 
0.5 
1.0 
0.6 
Other comprehensive (loss) income, net of tax
 
 
 
 
 
 
 
 
(1.5)
(0.1)
0.3 
Comprehensive (Loss) Income, net of tax
 
 
 
 
 
 
 
 
$ (107.0)
$ (45.1)
$ 46.4 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Current Assets
 
 
Cash and cash equivalents
$ 25.6 
$ 42.4 
Accounts receivable, net of allowances (2016 - $2.1 million; 2015 - $1.5 million)
91.6 
80.9 
Inventories, net
164.2 
173.9 
Deferred charges and prepaid expenses
2.8 
11.4 
Other current assets
6.2 
9.2 
Total Current Assets
290.4 
317.8 
Property, Plant and Equipment, Net
741.9 
769.3 
Other Assets
 
 
Pension assets
6.2 
20.7 
Intangible assets, net
25.0 
30.6 
Other non-current assets
6.4 
4.1 
Total Other Assets
37.6 
55.4 
Total Assets
1,069.9 
1,142.5 
Current Liabilities
 
 
Accounts payable, trade
87.0 
49.5 
Salaries, wages and benefits
20.3 
21.4 
Accrued pension and postretirement costs
3.0 
3.2 
Other current liabilities
20.4 
30.1 
Total Current Liabilities
130.7 
104.2 
Non-Current Liabilities
 
 
Convertible notes, net
66.4 
Other long-term debt
70.2 
200.2 
Accrued pension and postretirement costs
192.1 
114.1 
Deferred income taxes
32.0 
Other non-current liabilities
13.1 
10.0 
Total Non-Current Liabilities
341.8 
356.3 
Commitments and contingencies
Shareholders' Equity
 
 
Preferred shares, no par value; authorized 10.0 million shares, none issued
Common shares, without par value; authorized 200.0 million shares; issued 2016 and 2015 - 45.7 million shares
Additional paid-in capital
845.6 
828.8 
Retained deficit
(193.9)
(92.6)
Treasury shares, 2016 and 2015 - 1.5 million, respectively
(44.9)
(46.3)
Accumulated other comprehensive loss
(9.4)
(7.9)
Total Shareholders' Equity
597.4 
682.0 
Total Liabilities and Shareholders' Equity
$ 1,069.9 
$ 1,142.5 
Consolidated Balance Sheets Parenthetical (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Allowances for accounts receivable
$ 2.1 
$ 1.5 
Company preferred stock, no par vale, authorized (in shares)
10,000,000 
10,000,000 
Company preferred stock, shares issued (in shares)
Company common stock, no par vale, authorized (in shares)
200,000,000 
200,000,000 
Company common stock, shares issued (in shares)
45,700,000 
45,700,000 
Treasury shares (in shares)
1,500,000 
900,000 
Consolidated Statements of Shareholders' Equity Statement (USD $)
In Millions, unless otherwise specified
Total
Additional Paid-in Capital
Net Parent Investment
Retained Earnings (Deficit)
Treasury Shares
Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2013
$ 800.8 
$ 0 
$ 801.2 
$ 0 
$ 0 
$ (0.4)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net (loss) income
46.1 
62.3 
(16.2)
Pension and postretirement adjustment, net of tax
0.6 
0.6 
Foreign currency translation adjustments
(0.3)
(0.3)
Stock-based compensation expense
6.0 
4.0 
2.0 
Dividends
(12.7)
(12.7)
Net transfer (to)/from Parent and affiliates
(62.0)
9.2 
165.9 
(237.1)
Adjustments to net parent investment and additional paid-in capital
1,031.4 
(1,031.4)
Stock option exercise activity
6.1 
6.1 
Purchase of treasury shares
(30.6)
(30.6)
Shares surrendered for taxes
(4.1)
(4.1)
Ending balance at Dec. 31, 2014
749.9 
821.3 
(28.9)
(34.7)
(7.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net (loss) income
(45.0)
(45.0)
Pension and postretirement adjustment, net of tax
1.0 
1.0 
Foreign currency translation adjustments
(1.1)
(1.1)
Stock-based compensation expense
7.0 
7.0 
Dividends
(18.7)
(18.7)
Adjustments to net parent investment and additional paid-in capital
4.7 
4.7 
Cumulative effect of change in accounting principle
4.2 
4.2 
Stock option exercise activity
1.5 
1.5 
Purchase of treasury shares
(15.2)
(15.2)
Issuance of treasury shares
(5.7)
5.7 
Shares surrendered for taxes
(2.1)
(2.1)
Ending balance at Dec. 31, 2015
682.0 
828.8 
(92.6)
(46.3)
(7.9)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net (loss) income
(105.5)
(105.5)
   
Pension and postretirement adjustment, net of tax
0.5 
0.5 
Foreign currency translation adjustments
(2.0)
(2.0)
Stock-based compensation expense
6.7 
6.7 
Issuance of treasury shares
(1.4)
1.4 
Equity component of convertible notes, net
18.7 
18.7 
Deferred tax liability on convertible notes
(7.2)
(7.2)
Ending balance at Dec. 31, 2016
$ 597.4 
$ 845.6 
$ 0 
$ (193.9)
$ (44.9)
$ (9.4)
Consolidated Statements of Shareholders' Equity (Parenthetical)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Stockholders' Equity [Abstract]
 
 
 
Dividends per share (in dollars per share)
$ 0 
$ 0.42 
$ 0.28 
Consolidated Statement of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Operating Activities
 
 
 
Net (loss) income
$ (105.5)
$ (45.0)
$ 46.1 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
74.9 
73.4 
58.0 
Amortization of deferred financing fees and debt discount
2.9 
0.3 
Impairment charges and loss on sale or disposal of assets
1.2 
1.9 
2.6 
Deferred income taxes
(36.8)
(25.6)
(29.8)
Stock-based compensation expense
6.7 
7.0 
6.0 
Pension and postretirement expense
83.4 
(15.5)
107.2 
Pension and postretirement contributions
(4.9)
(15.6)
(20.7)
Reimbursement from postretirement plan assets
13.3 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(10.7)
86.2 
(17.7)
Inventories, net
9.7 
122.7 
(69.6)
Accounts payable, trade
37.5 
(70.7)
16.2 
Other accrued expenses
(8.2)
(31.5)
26.2 
Deferred charges and prepaid expenses
8.3 
22.7 
(27.6)
Other, net
2.6 
(3.2)
(3.0)
Net Cash Provided by Operating Activities
74.4 
107.1 
93.9 
Investing Activities
 
 
 
Capital expenditures
(42.7)
(78.2)
(129.6)
Proceeds from disposals of property, plant and equipment
0.4 
Net Cash Used by Investing Activities
(42.7)
(77.8)
(129.6)
Financing Activities
 
 
 
Cash dividends paid to shareholders
18.7 
12.7 
Purchase of treasury shares
(17.3)
(34.7)
Proceeds from exercise of stock options
1.5 
5.8 
Credit agreement repayments
(130.0)
(50.0)
(30.2)
Credit agreement borrowings
65.0 
185.2 
Proceeds from issuance of convertible notes
86.3 
Debt issuance costs
(4.8)
(1.4)
Dividend paid to The Timken Company
(50.0)
Net transfers from/(to) Parent and affiliates
(0.5)
6.8 
Net Cash (Used) Provided by Financing Activities
(48.5)
(21.4)
70.2 
Effect of exchange rate changes on cash
(Decrease) Increase In Cash and Cash Equivalents
(16.8)
7.9 
34.5 
Cash and cash equivalents at beginning of period
42.4 
34.5 
Cash and Cash Equivalents at End of Period
$ 25.6 
$ 42.4 
$ 34.5 
Company and Basis of Presentation
Company and Basis of Presentation
Company and Basis of Presentation
TimkenSteel Corporation (the Company or TimkenSteel) manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately 2 million tons and shipment capacity of 1.5 million tons. TimkenSteel’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil and gas; oil country tubular goods; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

TimkenSteel became an independent company as a result of the distribution on June 30, 2014 by The Timken Company (Timken) of 100 percent of the outstanding common shares of TimkenSteel to Timken shareholders. Each Timken shareholder of record as of the close of business on June 23, 2014 received one TimkenSteel common share for every two Timken common shares held as of the record date for the distribution. TimkenSteel common shares trade on the New York Stock Exchange under the ticker symbol “TMST.”

Prior to the spinoff on June 30, 2014, what is now TimkenSteel was made up of Timken’s steelmaking operations and operated as a reportable segment of Timken. The accompanying Consolidated Financial Statements for periods prior to the separation have been prepared from Timken’s historical accounting records and are presented on a stand-alone basis as if the operations had been conducted independently from Timken. Accordingly, Timken and its subsidiaries’ net investment in the operations is shown as net parent investment in lieu of stockholders’ equity in the Consolidated Financial Statements. The Consolidated Financial Statements for periods prior to the separation include the historical results of operations, assets and liabilities of the legal entities that are considered to comprise TimkenSteel. The historical results of operations and cash flows of TimkenSteel presented in the Consolidated Financial Statements for periods prior to the separation may not be indicative of what they would have been had TimkenSteel actually been a separate stand-alone entity during such periods, nor are they necessarily indicative of TimkenSteel’s future results of operations and cash flows.

The SBQ bars and tubes production processes take place at the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production processes take place at three downstream manufacturing facilities: TimkenSteel Material Services (Houston, TX), Tryon Peak (Columbus, NC), and St. Clair (Eaton, OH). Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the second half of 2015, in addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the former two segment operating structure. Since that change, the Company is organized in a centralized manner based on functionality. As a result, TimkenSteel conducts its business activities and reports financial results as one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore, the Company notes that monitoring financial results as one reportable segment helps the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations.

Presentation
Certain items previously reported in specific financial statement captions have been reclassified to conform to the fiscal 2016 presentation.


Change in Accounting Principle
On December 31, 2016, TimkenSteel voluntarily changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and losses during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.

These changes have been applied retrospectively to prior periods beginning with the formation of the TimkenSteel pension and postretirement benefit plans during the second quarter of 2014. The cumulative effect of the change in accounting principles resulted in a reduction of additional paid in capital of $229.4 million as of the date of establishment of the TimkenSteel pension and other postretirement plans.

The following table reflects the effect of the change in accounting principles on the 2016 Consolidated Financial Statements (dollars in millions, except per share data):

Increase (decrease)
 
Statement of Operations
 
Cost of products sold

$44.1

Selling, general and administrative expenses
5.5

Provision for income taxes

Net (loss) income
(49.6
)
Diluted earnings (loss) per share

($1.12
)

Statement of Comprehensive (Loss) Income, net of tax
 
Foreign currency translation adjustments

$2.3

Pension and postretirement adjustment
47.3


Balance Sheet
 
 
 
Additional paid in capital

($229.4
)
Retained deficit

($80.5
)
Accumulated other comprehensive loss
309.9


Statement of Cash Flows
 
 
 
Net (loss) income

($49.6
)
Pension and postretirement expense
49.6



Separately, the 2015 financial statements have been restated to correct immaterial errors related to deferred tax expense recognized on 2015 other comprehensive income associated with the Company’s U.K. pension plan ($4.8 million) and to correct the amount associated with the fair value of the Company’s U.K. pension plan ($0.7 million). The correction of these immaterial errors did not impact the 2015 statement of operations.

The following tables reflect the impact to the financial statement line items as a result of the change in accounting principles and the correction of immaterial errors discussed above for the prior periods presented in the accompanying financial statements (dollars in millions, except per share data):

Statement of Operations
2015
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net sales

$1,106.2


$—


$1,106.2

 

$1,674.2


$—


$1,674.2

Cost of products sold
1,097.4

(37.4
)
1,060.0

 
1,400.4

72.7

1,473.1

Gross Profit
8.8

37.4

46.2

 
273.8

(72.7
)
201.1

Selling, general and administrative expenses
111.0

(5.9
)
105.1

 
112.1

16.8

128.9

Impairment and restructuring charges
6.5


6.5

 
1.2


1.2

Operating (Loss) Income
(108.7
)
43.3

(65.4
)
 
160.5

(89.5
)
71.0

Interest expense
3.4


3.4

 
0.9


0.9

Other expenses, net
2.9


2.9

 
1.4


1.4

(Loss) Income Before Income Taxes
(115.0
)
43.3

(71.7
)
 
158.2

(89.5
)
68.7

(Benefit) provision for income taxes
(42.6
)
15.9

(26.7
)
 
53.8

(31.2
)
22.6

Net (Loss) Income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
Basic (loss) earnings per share

($1.63
)

$0.62


($1.01
)
 

$2.29


($1.28
)

$1.01

Diluted (loss) earnings per share

($1.63
)

$0.62


($1.01
)
 

$2.27


($1.27
)

$1.00


Statement of Comprehensive (Loss) Income, net of tax
 
2015
 
 
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net (loss) income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
(1.5
)
0.4

(1.1
)
 
(1.2
)
0.9

(0.3
)
Pension and postretirement adjustment
35.0

(29.7
)
5.3

 
(58.6
)
59.2

0.6

Correction of pension and postretirement adjustment (1)

(4.3
)
(4.3
)
 



Total pension and postretirement liability adjustments, net of tax
35.0

(34.0
)
1.0

 
(58.6
)
59.2

0.6

Other comprehensive income (loss), net of tax
33.5

(33.6
)
(0.1
)
 
(59.8
)
60.1

0.3

Comprehensive (Loss) Income, net of tax

($38.9
)

($6.2
)

($45.1
)
 

$44.6


$1.8


$46.4

(1) Adjustment to correct immaterial errors associated with the fair market value of the Company’s U.K. pension plan and deferred taxes related to other comprehensive income recognized during 2015.

Balance Sheet
2015
 
As Reported
Adjustments
Adjusted
Other Assets
 
 
 
Correction to non-current pension assets (1)

$20.0


$0.7


$20.7

 
 
 
 
Non-Current Liabilities
 
 
 
Deferred income taxes

$26.9


$—


$26.9

Correction to deferred income taxes (1)

5.1

5.1

Total deferred income taxes

$26.9


$5.1


$32.0

 
 
 
 
Shareholders’ Equity
 
 
 
Additional paid-in-capital

$1,058.2


($229.4
)

$828.8

Retained earnings (deficit)

($61.7
)

($30.9
)

($92.6
)
Accumulated other comprehensive income

($263.8
)

$260.2


($3.6
)
Correction to accumulated other comprehensive loss (1)

(4.3
)
(4.3
)
Total accumulated other comprehensive income

($263.8
)

$255.9


($7.9
)
(1) Adjustment to correct immaterial errors associated with the fair market value of the Company’s U.K. pension plan and deferred taxes related to other comprehensive income recognized during 2015.

Cash Flows from Operating Activities
2015
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net (loss) income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

Deferred income taxes
(41.5
)
15.9

(25.6
)
 
1.4

(31.2
)
(29.8
)
Pension and postretirement expense
30.7

(46.2
)
(15.5
)
 
14.9

92.3

107.2

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Inventories, net
119.9

2.8

122.7

 
(66.8
)
(2.8
)
(69.6
)
Net Cash Provided by Operating Activities
107.1


107.1

 
93.9


93.9

Significant Accounting Policies
Significant Accounting Policies
Significant Accounting Policies
Basis of Combination:
The Consolidated Financial Statements include the combined assets, liabilities, revenues and expenses related to TimkenSteel as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014. All significant intercompany accounts and transactions within TimkenSteel have been eliminated in the preparation of the Consolidated Financial Statements. All significant intercompany transactions with Timken prior to the spinoff are deemed to have been paid in the period the cost was incurred.
Use of Estimates:
The preparation of these Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. These estimates and assumptions are reviewed and updated regularly to reflect recent experience.
Revenue Recognition:
TimkenSteel recognizes revenue when title passes to the customer, which includes related-party sales to Timken and its subsidiaries for the periods prior to spinoff. This occurs at the shipping point except for goods sold by certain of the Company’s foreign entities and certain exported goods, where title passes when the goods reach their destination. Selling prices are fixed based on purchase orders or contractual arrangements. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold in the Consolidated Statements of Operations.
Cash Equivalents:
TimkenSteel considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Allowance for Doubtful Accounts:
TimkenSteel maintains an allowance for doubtful accounts, which represents an estimate of losses expected from the accounts receivable portfolio, to reduce accounts receivable to their net realizable value. The allowance is based upon historical trends in collections and write-offs, management’s judgment of the probability of collecting accounts and management’s evaluation of business risk. TimkenSteel extends credit to customers satisfying pre-defined credit criteria. TimkenSteel believes it has limited concentration of credit risk due to the diversity of its customer base.
Inventories, Net:
Inventories are valued at the lower of cost or market. The majority of TimkenSteel’s domestic inventories are valued by the last-in, first-out (LIFO) method. The remaining inventories, including manufacturing supplies inventory as well as international (outside the U.S.) inventories are valued by the first-in, first-out (FIFO), average cost or specific identification methods. Reserves are established for product inventory that is identified to be surplus and/or obsolete based on future requirements.
Property, Plant and Equipment, Net:
Property, plant and equipment, net are valued at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. The provision for depreciation is computed principally by the straight-line method based upon the estimated useful lives of the assets. The useful lives are approximately 30 years for buildings and three to 20 years for machinery and equipment.
Intangible Assets, Net:
Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives, with useful lives ranging from three to 15 years.
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350-40, “Internal-Use Software,” (ASC 350-40), TimkenSteel capitalizes certain costs incurred for computer software developed or obtained for internal use. TimkenSteel capitalizes substantially all external costs and qualifying internal costs related to the purchase and implementation of software projects used for business operations. Capitalized software costs primarily include purchased software and external consulting fees. Capitalized software projects are amortized over the estimated useful lives of the software.
Long-lived Asset Impairment:
Long-lived assets (including tangible assets and intangible assets subject to amortization) are reviewed for impairment when events or changes in circumstances have occurred indicating that the carrying value of the assets may not be recoverable.
TimkenSteel tests recoverability of long-lived assets at the lowest level for which there are identifiable cash flows that are independent from the cash flows of other assets. Assets and asset groups held and used are measured for recoverability by comparing the carrying amount of the asset or asset group to the sum of future undiscounted net cash flows expected to be generated by the asset or asset group.
Assumptions and estimates about future values and remaining useful lives of TimkenSteel’s long-lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in TimkenSteel’s business strategy and internal forecasts.
If an asset or asset group is considered to be impaired, the impairment loss that would be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. To determine fair value, TimkenSteel uses internal cash flow estimates discounted at an appropriate interest rate, third party appraisals, as appropriate, and/or market prices of similar assets, when available.
In the years ending December 31, 2015 and 2014, TimkenSteel recorded impairment charges of $0.9 million and $1.2 million respectively, related to the discontinued use of certain long-lived assets. No impairment charges were recorded for the year ended December 31, 2016.
Product Warranties:
TimkenSteel accrues liabilities for warranties based upon specific claim incidents in accordance with accounting rules relating to contingent liabilities. Should TimkenSteel become aware of a specific potential warranty claim for which liability is probable and reasonably estimable, a specific charge is recorded and accounted for accordingly. TimkenSteel had no significant warranty claims for the years ended December 31, 2016, 2015 and 2014.
Income Taxes:
For the periods ending prior to and on June 30, 2014, income taxes, as presented herein, attribute current and deferred income taxes of Timken to the TimkenSteel standalone financial statements in a manner that is systematic, rational and consistent with the asset and liability method prescribed by the FASB ASC Topic 740, “Accounting for Income Taxes” (ASC 740). Accordingly, the TimkenSteel income tax provision was prepared following the “separate return method.” The separate return method applies ASC 740 to the standalone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions included in the financial statements of Timken may not be included in the Consolidated Financial Statements of TimkenSteel. Similarly, the tax treatment of certain items reflected in the Consolidated Financial Statements of TimkenSteel may not be reflected in the financial statements and tax returns of Timken; therefore, such items as alternative minimum tax, net operating losses, credit carryforwards, and valuation allowances may exist in the stand-alone financial statements that may or may not exist in Timken’s financial statements.
Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. TimkenSteel recognizes valuation allowances against deferred tax assets by tax jurisdiction when it is more likely than not that such assets will not be realized. Accruals for uncertain tax positions are provided for in accordance with ASC 740. TimkenSteel recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.
In general, the taxable income (loss) of various steel entities was included in Timken’s consolidated tax returns, where applicable, in jurisdictions around the world. As such, separate income tax returns were not prepared for any entities of TimkenSteel. Consequently, income taxes currently payable are deemed to have been remitted to Timken, in cash, in the period the liability arose and income taxes currently receivable are deemed to have been received from Timken in the period that a refund could have been recognized by TimkenSteel had TimkenSteel been a separate taxpayer. Accrued U.S. federal, state and certain foreign current income tax balances, including penalties and interest, are treated as being settled without payment as of the end of each year. Therefore, the settlement of the current income tax liability without payment is treated as a Parent contribution and is included in net transfer (to)/from Timken and affiliates in the accompanying Consolidated Statements of Shareholders’ Equity.
Following the spinoff on June 30, 2014, TimkenSteel accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. TimkenSteel recognizes deferred tax assets to the extent TimkenSteel believes these assets are more likely than not to be realized. In making such a determination, TimkenSteel considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If TimkenSteel determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, TimkenSteel would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. TimkenSteel records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) TimkenSteel determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, TimkenSteel recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
TimkenSteel recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets.
Foreign Currency Translation:
Assets and liabilities of subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected as a separate component of accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Operations. TimkenSteel realized foreign currency exchange losses of $0.8 million in 2016, $1.3 million in 2015 and $1.1 million in 2014.
Net Parent Investment:
Prior to the spinoff, Timken’s net investment in TimkenSteel was presented as net parent investment in lieu of stockholders’ equity. The Consolidated Statements of Shareholders’ Equity included net cash transfers and other property transfers between Timken and TimkenSteel. Timken performed cash management and other treasury-related functions on a centralized basis for nearly all of its legal entities, which included TimkenSteel. The net parent investment account included assets and liabilities incurred by Timken on behalf of TimkenSteel such as accrued liabilities related to corporate allocations including administrative expenses for legal, accounting, treasury, information technology, human resources and other services. Other assets and liabilities recorded by Timken, whose related income and expense had been pushed down to TimkenSteel, were also included in net parent investment.
All intercompany transactions effected through net parent investment in the accompanying Consolidated Balance Sheets were considered cash receipts and payments and are reflected in financing activities in the accompanying Consolidated Statements of Cash Flows.
The following table is a reconciliation of the amounts related to the spinoff, presented in the Consolidated Statements of Shareholders’ Equity as net transfer (to)/from Timken and affiliates and the amounts presented as net transfers from/(to) Timken and affiliates on the Consolidated Statements of Cash Flows.
 
Year Ended
 
December 31, 2014
Net transfer (to)/from Timken and affiliates - Equity

($62.0
)
Dividend paid to Timken
50.0

Net transfer of (assets) and liabilities from Timken
25.0

Settlement of (assets) and liabilities with Timken
(9.2
)
Cash received from Timken for settlement of separation
3.0

Net transfers from/(to) Timken and affiliates - Cash Flow

$6.8



Additionally, during 2015, additional paid in capital was adjusted to reflect final adjustments between the Company and Timken related primarily to the allocation of certain temporary differences calculated for tax purposes.

Pension and Other Postretirement Benefits:
TimkenSteel recognizes an overfunded status or underfunded status (e.g., the difference between the fair value of plan assets and the benefit obligations) as either an asset or a liability for its defined benefit pension and other postretirement benefit plans on the Consolidated Balance Sheets. As discussed in Note 1 - Company and Basis of Presentation, on December 31, 2016, TimkenSteel voluntarily changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and losses during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. the delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.
Prior to the spinoff, certain of TimkenSteel’s employees participated in defined benefit pension and other postretirement benefit plans sponsored by Timken and accounted for by Timken in accordance with accounting guidance for defined benefit pension and other postretirement benefit plans. Expense allocations for these benefits were determined based on a review of personnel by business unit and based on allocations of corporate and other shared functional personnel.
Stock-Based Compensation:
TimkenSteel recognizes stock-based compensation expense based on the grant date fair value of the stock-based awards over their required vesting period on a straight-line basis, whether the awards were granted with graded or cliff vesting. Stock options are issued with an exercise price equal to the opening market price of TimkenSteel common shares on the date of grant. The fair value of stock options is determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. The fair value of stock-based awards that will settle in TimkenSteel common shares, other than stock options, is based on the opening market price of TimkenSteel common shares on the grant date. The fair values of stock-based awards that will settle in cash are remeasured at each reporting period until settlement of the awards.
TimkenSteel early adopted Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” in the fourth quarter of 2016, with the effect recorded as of January 1, 2016.
Under ASU 2016-09, TimkenSteel recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the consolidated statement of operations. The Company recorded an adjustment to beginning retained earnings of $4.2 million for previously unrecognized excess tax benefits. The excess tax benefits and tax deficiencies are considered discrete items in the reporting period they occur and are not included in the estimate of an entity’s annual effective tax rate.
TimkenSteel’s prior year additional paid in capital pool will be not be affected because those excess benefits have already been recognized in the financial statements, and the recognition of excess tax benefits and tax deficiencies in the income statement is prospective only in the fiscal year of adoption. As a result, there was not a reclassification between additional paid in capital and retained earnings in the fiscal years before adoption.
Derivative Instruments:
TimkenSteel recognizes all derivatives on the Consolidated Balance Sheets at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. Forward contracts on various foreign currencies may be entered into in order to manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies. Other forward exchange contracts on various foreign currencies may be entered into in order to manage the foreign currency exchange rate risk associated with certain of TimkenSteel’s commitments denominated in foreign currencies.
As of December 31, 2016, TimkenSteel had no outstanding foreign currency forward contracts. As of December 31, 2015, TimkenSteel had foreign currency forward contracts with a fair value of less than $0.1 million based on level 2 inputs.
Research and Development:
Expenditures for TimkenSteel research and development amounted to $8.0 million, $8.6 million and $8.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, and were recorded as a component of selling, general and administrative expenses in the Consolidated Statements of Operations. These expenditures may fluctuate from year to year depending on special projects and the needs of TimkenSteel and its customers.
Adoption of New Accounting Standards
The Company adopted the following standards during 2016, none of which had a material impact on the Consolidated Financial Statements or the related Notes to the Consolidated Financial Statements.

Standard
 
Effective Date
 
 
 
2015-05
Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
January 1, 2016
2016-09
Stock Compensation: Improvements to Employee Share-Based Payment Accounting - See Note 10
January 1, 2016
2015-03
Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs - See Note 6
March 31, 2016


Accounting Standards Issued But Not Yet Adopted
In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740). This ASU requires immediate recognition of the income tax consequences of intercompany asset transfers other than inventory. The ASU is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force),” The guidance is intended to reduce diversity in practice in how certain items are classified in the cash flow statement. It is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted, provided that all the issues addressed in the standard are adopted in the same period. Retrospective transition is required. TimkenSteel plans to adopt ASU 2016-15 effective January 1, 2017, and does not expect the adoption to have a material effect on its Statements of Cash Flows.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU changes how entities will measure credit losses for most financial assets, including trade and other receivables. This guidance will replace the current incurred loss approach with an expected loss model. It is effective for annual periods beginning after December 31, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for operating leases, and requires additional quantitative and qualitative disclosures. It is effective for annual reporting periods beginning after December 15, 2018. The Company regularly enters into operating leases. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory (Topic 330),” which requires that certain inventory be measured at the lower of cost or net realizable value. The guidance applies only to inventories for which cost is determined by methods other than last-in, first-out (LIFO). The Company values certain portions of its inventory using the FIFO, average cost, or specific identification methods. This standard is effective for annual reporting periods beginning after December 15, 2016. TimkenSteel plans to adopt this standard effective January 1, 2017, and does not expected the adoption to have a material effect its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition and will supersede Topic 605, “Revenue Recognition,” and most industry-specific guidance. Under ASU 2014-09 and the subsequently issued amendments, the core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required about the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. This standard is effective for annual reporting periods after December 15, 2017. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition. TimkenSteel anticipates adopting this standard using the modified retrospective approach as of January 1, 2018.
Inventories
Inventories
Inventories
The components of inventories, net as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Inventories, net:

 
 
Manufacturing supplies

$37.9

 

$43.3

Raw materials
16.2

 
14.6

Work in process
58.6

 
59.5

Finished products
59.6

 
64.9

Subtotal
172.3

 
182.3

Allowance for surplus and obsolete inventory
(8.1
)
 
(8.4
)
Total Inventories, net

$164.2

 

$173.9



Inventories are valued at the lower of cost or market, with approximately 64% valued by the LIFO method, and the remaining inventories valued by the FIFO, average cost or specific identification methods.
The LIFO reserve as of December 31, 2016 and December 31, 2015 was $44.6 million and $49.6 million, respectively. TimkenSteel recognized a decrease in its LIFO reserve of $5.0 million and $50.7 million during 2016 and 2015, respectively, in cost of products sold. The decreases in the LIFO reserve recognized during 2016 and 2015 were due to lower manufacturing costs, lower scrap steel costs, and lower inventory quantities.
Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment
The components of property, plant and equipment, net as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Property, Plant and Equipment, net:

 
 
Land

$13.3

 

$13.4

Buildings and improvements
420.6

 
418.2

Machinery and equipment
1,352.0

 
1,298.2

Construction-in-progress
63.9

 
74.9

Subtotal
1,849.8

 
1,804.7

Less allowances for depreciation
(1,107.9
)
 
(1,035.4
)
Property, Plant and Equipment, net

$741.9

 

$769.3



Total depreciation expense was $68.0 million, $67.2 million and $50.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.
TimkenSteel recorded capitalized interest related to construction projects of $0.7 million, $1.0 million and $6.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. The amount of capitalized interest for 2014 includes $5.7 million that was allocated to TimkenSteel from Timken prior to the spinoff.
TimkenSteel recorded impairment charges of $0.9 million and $0.3 million for the years ended December 31, 2015 and 2014, respectively, related to the discontinued use of certain assets. No impairment charges were recorded for the year ended December 31, 2016.
Intangible Assets
Intangible Assets
Intangible Assets
The components of intangible assets, net as of December 31, 2016 and 2015 were as follows:
 
December 31, 2016
 
December 31, 2015
 
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Intangible Assets Subject to Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships

$6.3

 

$3.7

 

$2.6

 

$6.8

 

$3.7

 

$3.1

 
Technology use
9.0

 
5.2

 
3.8

 
9.0

 
4.7

 
4.3

 
Capitalized software
58.9

 
40.3

 
18.6

 
57.9

 
34.7

 
23.2

 
Total Intangible Assets

$74.2

 

$49.2

 

$25.0

 

$73.7

 

$43.1

 

$30.6

 


Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives. The weighted-average useful lives of the customer relationships, technology use and capitalized software are 15 years, 15 years and 6.3 years, respectively. The weighted-average useful life of total intangible assets is 8.1 years.
Amortization expense for intangible assets was $6.9 million, $6.2 million and $7.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. Based upon the intangible assets subject to amortization as of December 31, 2016, TimkenSteel’s estimated annual amortization expense for the five succeeding years is shown below (in millions):
Year
Amortization Expense
2017

$6.3

2018
5.1

2019
4.0

2020
2.9

2021
1.0


In the fourth quarter of 2014, TimkenSteel made a final determination to discontinue the use of a trade name acquired in 2008, resulting in an impairment charge of $0.9 million to reduce the asset to its estimated fair value of zero.
Financing Arrangements
Financing Arrangements
Financing Arrangements
Convertible Notes

In May 2016, the Company issued $75.0 million aggregate principal amount of Convertible Senior Notes, and an additional $11.3 million principal amount to cover over-allotments (Convertible Notes). The Indenture for the Convertible Notes dated May 31, 2016, which was filed with the Securities and Exchange Commission as an exhibit to a Form 8-K filed on May 31, 2016, contains a complete description of the terms of the Convertible Notes. The key terms are as follows:

Maturity Date:         June 1, 2021 unless repurchased or converted earlier

Interest Rate:         6.0% cash interest per year

Interest Payments Dates:     June 1 and December 1 of each year, beginning on December 1, 2016

Initial Conversion Price:    Approximately $12.58 per common share of the Company

Initial Conversion Rate:    79.5165 common shares per $1,000 principal amount of Notes

The net proceeds to the Company from the offering were $83.2 million, after deducting the initial underwriters’ discount and fees and the offering expenses payable by the Company. The Company used the net proceeds to repay a portion of the amounts outstanding under the Amended Credit Agreement.
    
The components of the Convertible Notes as of December 31, 2016 are as follows:
Principal

$86.3

Less: Debt issuance costs, net of amortization
(2.1
)
Less: Debt discount, net of amortization
(17.8
)
Convertible notes, net

$66.4


    
The initial value of the principal amount recorded as a liability at the date of issuance was $66.9 million, using an effective interest rate of 12.0%. The remaining $19.4 million of principal amount was allocated to the conversion feature and recorded as a component of shareholders’ equity at the date of issuance. This amount represents a discount to the debt to be amortized through interest expense using the effective interest method through the maturity of the Convertible Notes.

Transaction costs were allocated to the liability and equity components based on their relative values. Transaction costs attributable to the liability component of $2.4 million are amortized to interest expense over the term of the Convertible Notes, and transaction costs attributable to the equity component of $0.7 million are included in shareholders’ equity.
    
The following table sets forth total interest expense recognized related to the Convertible Notes for the year ended December 31, 2016:
Contractual interest expense

$3.0

Amortization of debt issuance costs
0.2

Amortization of debt discount
1.7

Total

$4.9


    
The fair value of the Convertible Notes was approximately $135.0 million as of December 31, 2016. The fair value of the Convertible Notes, which falls within Level 1 of the fair value hierarchy, is based on the last price traded in December 2016.
    
Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding March 1, 2021 only under certain circumstances described in the Convertible Notes Indenture, based on the reported sale price of the Company’s common shares for specified trading days as a percentage of the conversion price of the Convertible Notes, and upon the occurrence of specified corporate events. On or after March 1, 2021 until the business day preceding the maturity date, holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at their option.

Upon conversion, the Company will pay or deliver, as the case may be, cash, common shares or a combination of cash and common shares, at its election. If the Company satisfies its conversion obligation solely in cash or through payment and deliver, as the case may be, of a combination of cash and common shares, the amount of cash and number of common shares, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 40-trading day observation period.

If the Company undergoes a fundamental change, subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to the repurchase date.

Upon certain events of default occurring and continuing (including failure to pay principal or interest on the Convertible Notes when due and payable), the Trustee or the holders of at least 25% in principal amount may declare 100% of the principal and accrued and unpaid interest, if any, on all the Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal and accrued and unpaid interest on the Convertible Notes will become due and payable immediately.

Other Long-Term Debt

The components of other long-term debt as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.71% as of December 31, 2016)

$12.2

 

$12.2

Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.70% as of December 31, 2016)
9.5

 
9.5

Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.70% as of December 31, 2016)
8.5

 
8.5

Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
40.0

 
170.0

Total Other Long-Term Debt

$70.2

 

$200.2



Amended Credit Agreement
On February 26, 2016, the Company, as borrower, and certain domestic subsidiaries, as subsidiary guarantors, entered into Amendment No. 1 to the Amended and Restated Credit Agreement (as amended by the Amendment, the Amended Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.

The Amended Credit Agreement provides for a $265.0 million asset-based revolving credit facility, including a $13.3 million sublimit for the issuance of commercial and standby letters of credit, and a $26.5 million sublimit for swingline loans. The availability of borrowings is subject to a borrowing base calculation based upon a valuation of the eligible accounts receivable, inventory and machinery and equipment of TimkenSteel and the subsidiary guarantors, each multiplied by an applicable advance rate. The Amended Credit Agreement includes a block on availability equal to the greater of $28.9 million or 12.5% of the aggregate commitments (except that in the event of a mandatory reduction in the commitments, the block on availability will be equal to the greater of $20.0 million or 12.5% of the aggregate commitments), effectively reducing the Company’s borrowing base by the availability block.

    The Amended Credit Agreement contains certain customary covenants, including covenants that limit TimkenSteel’s and its subsidiaries’ ability to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness (iv) enter into consolidations, mergers, acquisitions and sales of assets, (v) make distributions and other restricted payments, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into restrictive agreements, including agreements that restrict the ability to incur liens or make distributions. Further, the Amended Credit Agreement contains financial covenants that (i) limit the amount of capital expenditures TimkenSteel may make to $45.0 million in fiscal year 2016 and $50.0 million in fiscal years thereafter and (ii) require the Company to maintain a minimum specified fixed charge coverage ratio for the year-to-date periods beginning January 1, 2017 and ending June 30, 2017, July 31, 2017 and August 31, 2017. As of December 31, 2016, we are in compliance with all covenants.

Borrowings under the Amended Credit Agreement bear interest based on the daily balance outstanding at LIBOR (with no rate floor), plus an applicable margin (varying from 3.00% to 3.50%) and an additional 0.75% on the machinery and equipment component or, in certain cases, an alternate base rate (based on certain lending institutions’ Prime Rate or as otherwise specified in the Amended Credit Agreement, with no rate floor), plus an applicable margin (varying from 2.00% to 2.50%). The Amended Credit Agreement also carries a commitment fee equal to the unused borrowings multiplied by an applicable margin of 0.50%. The applicable margins are calculated quarterly and vary based on TimkenSteel’s average quarterly availability as set forth in the Amended Credit Agreement. The interest rate under the Amended Credit Agreement was 4.80% as of December 31, 2016. The amount available under the Amended Credit Agreement as of December 31, 2016 was $119.7 million net, after reducing for the block on availability of $33.1 million.

Revenue Refunding Bonds
    
On June 1, 2014, Timken purchased, in lieu of redemption, the State of Ohio Water Development Revenue Refunding Bonds (Water Bonds), State of Ohio Air Quality Development Revenue Refunding Bonds (Air Quality Bonds) and State of Ohio Pollution Control Revenue Refunding Bonds (Pollution Control Bonds) (collectively, Bonds). Pursuant to an Assignment and Assumption Agreement dated June 24, 2014 between Timken and TimkenSteel, Timken assigned all of its right, title and interest in and to the loan agreements and the notes associated with the Bonds to, and these obligations were assumed by, TimkenSteel. Additionally, replacement letters of credit were issued for the Water Bonds and the Pollution Control Bonds. The Bonds were remarketed on June 24, 2014 (Remarketing Date) in connection with the conversion of the interest rate mode for the Bonds to the weekly rate and the delivery of the replacement letters of credit, as applicable. TimkenSteel is responsible for payment of the interest and principal associated with the Bonds subsequent to the Remarketing Date.

On September 1, 2016, the Water Bonds were remarketed in connection with the delivery of a replacement letter of credit issued by JP Morgan Chase Bank, N.A. The key terms of the Water Bonds did not change as a result of the remarketing.
All of TimkenSteel’s other long-term debt is variable-rate debt. As such, the carrying value of this debt is a reasonable estimate of fair value as interest rates on these borrowings approximate current market rates, which is considered a Level 2 fair value input as defined by ASC 820, “Fair Value Measurements.” The valuation of Level 2 is based on quoted prices for similar assets and liabilities in active markets that are observable either directly or indirectly

Advanced Quench-and-Temper Facility

In the second quarter of 2015, TimkenSteel entered into a lease arrangement with the Stark County Port Authority in connection with the construction of a new advanced quench-and-temper facility in Perry Township, Ohio and the issuance of an Industrial Revenue Bond. The bond is held 100% by TimkenSteel Material Services, LLC (a wholly-owned subsidiary of TimkenSteel) and, accordingly, the obligation under the lease agreement and investment in the Industrial Revenue Bond, as well as the related interest income and expense, are eliminated in the Consolidated Financial Statements. As of December 31, 2016, $38.2 million has been spent on the new advanced quench-and-temper facility and is reported in the caption Property, plant and equipment, net in the Consolidated Balance Sheets. Of this amount, $10.8 million has been financed through the capital lease arrangement described above.

Leases
TimkenSteel leases a variety of real property and equipment. Rent expense under operating leases amounted to $8.6 million, $11.0 million and $9.2 million in 2016, 2015 and 2014, respectively. As of December 31, 2016, future minimum lease payments for non-cancelable operating leases totaled $20.0 million and are payable as follows: 2017-$6.5 million; 2018-$5.5 million; 2019-$3.7 million; 2020-$2.7 million; and 2021-$1.6 million. TimkenSteel has no significant lease commitments after 2021.
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the years ended December 31, 2016 and 2015 by component are as follows:
 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2014

($3.9
)
 

($3.9
)
 

($7.8
)



 


 


Other comprehensive (loss) income before reclassifications, before income tax
(1.1
)
 

 
(1.1
)
Amounts reclassified from accumulated other comprehensive loss, before income tax

 
1.7

 
1.7

Income tax (expense)

 
(0.7
)
 
(0.7
)
Net current period other comprehensive income, net of income taxes
(1.1
)
 
1.0

 
(0.1
)
Balance at December 31, 2015
(5.0
)
 
(2.9
)
 
(7.9
)



 


 


Other comprehensive (loss) income before reclassifications, before income tax
(2.0
)
 
(0.9
)
 
(2.9
)
Amounts reclassified from accumulated other comprehensive loss, before income tax

 
1.7

 
1.7

Income tax (expense)

 
(0.3
)
 
(0.3
)
Net current period other comprehensive (loss) income, net of income taxes
(2.0
)
 
0.5

 
(1.5
)
Balance at December 31, 2016
(7.0
)
 
(2.4
)
 
(9.4
)
The above table reflects the adjustments discussed in Note 1 - Company and Basis of Presentation.    
The amount reclassified from accumulated other comprehensive loss for the pension and postretirement liability adjustment was included in cost of products sold and selling, general and administrative expenses in the Consolidated Statements of Operations. These components are included in the computation of pension and postretirement net periodic benefit cost.
Retirement and Postretirement Benefits
Retirement and Postretirement Benefits
Retirement and Postretirement Benefit Plans
Defined Benefit Pensions
Prior to the spinoff, eligible TimkenSteel employees, including certain employees in foreign countries, participated in the following Timken-sponsored plans: The Timken Company Pension Plan; The Timken-Latrobe-MPB-Torrington Retirement Plan; and the Timken U.K. Pension Scheme. During 2014, the assets and liabilities of these pension plans related to TimkenSteel employees and retirees were transferred to pension plans sponsored by TimkenSteel as follows: TimkenSteel Corporation Retirement Plan; TimkenSteel Corporation Bargaining Unit Pension Plan and the TimkenSteel U.K. Pension Scheme. Plan assets of $1,193.6 million, benefit plan obligations of $1,134.8 million and accumulated other comprehensive losses of $361.8 million ($228.9 million, net of tax) were recorded by TimkenSteel related to these plans, prior to the change in accounting principle discussed below and in Note 1 - Company and Basis of Presentation.
Pension benefits earned are generally based on years of service and compensation during active employment. TimkenSteel’s funding policy is consistent with the funding requirements of applicable laws and regulations. Asset allocations are established in a manner consistent with projected plan liabilities, benefit payments and expected rates of return for the various asset classes. The expected rate of return for the investment portfolio is based on expected rates of return for various asset classes, as well as historical asset class and fund performance.
Postretirement Benefits
Prior to the spinoff, eligible retirees of TimkenSteel and their dependents were provided health care and life insurance benefits from the following Timken-sponsored plans: The Timken Company Bargaining Unit Welfare Benefit Plan for Retirees and The Timken Company Welfare Plan for Retirees. During 2014, the assets and liabilities of these postretirement plans related to TimkenSteel employees and retirees were transferred to postretirement plans sponsored by TimkenSteel as follows: TimkenSteel Corporation Bargaining Unit Welfare Benefit Plan for Retirees and TimkenSteel Corporation Welfare Benefit Plan for Retirees. Plan assets of $130.1 million, benefit plan obligations of $232.2 million and accumulated other comprehensive losses of $8.2 million ($5.0 million, net of tax) were recorded by TimkenSteel related to these plans, prior to the change in accounting principle discussed below and in Note 1 - Company and Basis of Presentation.
On December 31, 2016, TimkenSteel voluntarily changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. See Note 1 - Company and Basis of Presentation for amounts recognized as a result of the change in accounting principle and for further discussion. The information within this Note has been adjusted to reflect the change in accounting principle.

The following tables set forth the change in benefit obligation, change in plan assets, funded status and amounts recognized on the Consolidated Balance Sheets for the defined benefit pension plans as of December 31, 2016 and 2015:
 
Pension
 
Postretirement
Change in benefit obligation:
2016
2015
 
2016
2015
Benefit obligation at the beginning of year

$1,163.5


$1,257.5

 

$215.3


$243.3

Service cost
15.6

16.8

 
1.5

1.7

Interest cost
52.4

51.3

 
9.4

9.4

Actuarial losses (gains)
81.1

(88.2
)
 
6.6

(19.9
)
Benefits paid
(79.1
)
(70.2
)
 
(19.5
)
(19.2
)
Plan amendment


 
0.9


Foreign currency translation adjustment
(13.2
)
(3.7
)
 


Benefit obligation at the end of year

$1,220.3


$1,163.5

 

$214.2


$215.3

 
Pension
 
Postretirement
Change in plan assets:
2016
2015
 
2016
2015
Fair value of plan assets at the beginning of year

$1,144.3


$1,230.0

 

$137.9


$142.6

Actual return on plan assets
78.7

(12.0
)
 
6.1

(0.6
)
Company contributions / payments
2.2

0.5

 
2.7

15.1

Benefits paid
(79.1
)
(70.2
)
 
(19.5
)
(19.2
)
Reimbursement from postretirement plan assets


 
(13.3
)

Foreign currency translation adjustment
(14.4
)
(4.0
)
 


Fair value of plan assets at end of year

$1,131.7


$1,144.3

 

$113.9


$137.9

Funded status at end of year

($88.6
)

($19.2
)


($100.3
)

($77.4
)

In the third quarter of 2016, the Company amended its postretirement benefit plans relating to its non-bargaining retirees, effective January 1, 2017, to provide for the transition of certain Medicare-eligible retirees and their eligible dependents from Company-sponsored group retiree medical coverage to individual health insurance purchased through an insurance company private exchange. This change is reflected in the Change in benefit obligation table as the Plan amendment for $0.9 million.

The TimkenSteel Corporation Retirement Plan (Salaried Plan) has a provision that permits employees to elect to receive their pension benefits in a lump sum. In the third quarter of 2016, the cumulative cost of all settlements exceeded the sum of the service cost and interest cost components of net periodic pension cost for the Salaried Plan. The Company completed a full remeasurement of its pension obligations and plan assets associated with the Salaried Plan as of September 30, 2016. This settlement loss is included in the net remeasurement losses (gains) as a component of net periodic benefit cost.

The accumulated benefit obligation at December 31, 2016 exceeded the fair value of plan assets for two of the Company’s pension plans. For these plans, the benefit obligation was $886.5 million, the accumulated benefit obligation was $866.5 million and the fair value of plan assets was $791.6 million as of December 31, 2016.

The total pension accumulated benefit obligation for all plans was $1,192.1 million and $1,132.8 million as of December 31, 2016 and 2015, respectively.

Amounts recognized on the balance sheet at December 31, 2016 and 2015, for TimkenSteel’s pension and postretirement benefit plans include:
 
Pension
 
Postretirement
 
2016
2015
 
2016
2015
Non-current assets

$6.2


$20.7

 

$—


$—

Current liabilities
(0.6
)
(0.6
)
 
(2.4
)
(2.6
)
Non-current liabilities
(94.2
)
(39.3
)
 
(97.9
)
(74.8
)
 

($88.6
)

($19.2
)
 

($100.3
)

($77.4
)

Included in accumulated other comprehensive loss at December 31, 2016 and 2015, were the following before-tax amounts that had not been recognized in net periodic benefit cost:
 
Pension
 
Postretirement
 
2016
2015
 
2016
2015
Unrecognized prior service cost

$1.5


$2.1

 

$2.1


$2.4


Amounts expected to be amortized from accumulated other comprehensive loss and included in total net periodic benefit cost during the year ended December 31, 2017 are as follows:
 
Pension
 
Postretirement
 
 
 
 
Prior service cost

$0.5

 

$1.0


The weighted-average assumptions used in determining benefit obligation as of December 31, 2016 and 2015 were as follows:
 
Pension
 
Postretirement
Assumptions:
2016
2015
 
2016
2015
Discount rate
4.17
%
4.67
%
 
4.09
%
4.51
%
Future compensation assumption
3.09
%
2.76
%
 
n/a

n/a

The weighted-average assumptions used in determining benefit cost for the years ended December 31, 2016 and 2015 were as follows:
 
Pension
 
Postretirement
Assumptions:
2016
2015
 
2016
2015
Discount rate
4.67
%
4.21
%
 
4.51
%
4.05
%
Future compensation assumption
3.08
%
3.09
%
 
n/a

n/a

Expected long-term return on plan assets
6.46
%
6.98
%
 
5.00
%
5.00
%

The discount rate assumption is based on current rates of high-quality long-term corporate bonds over the same period that benefit payments will be required to be made. The expected rate of return on plan assets assumption is based on the weighted-average expected return on the various asset classes in the plans’ portfolios. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.
For measurement purposes, TimkenSteel assumed a weighted-average annual rate of increase in the per capita cost (health care cost trend rate) of 6.50% and 6.75% for 2016 and 2015, respectively, declining gradually to 5.00% in 2023 and thereafter for medical and prescription drug benefits, and 8.50% and 8.75% for 2016 and 2015, respectively, declining gradually to 5.00% in 2031 and thereafter for HMO benefits. A one percentage point increase in the assumed health care cost trend rate would have increased the 2016 and 2015 postretirement benefit obligation by $1.6 million and $2.3 million, respectively and increased the total service and interest cost components by $0.1 million in both the years ended December 31, 2016 and 2015. A one percentage point decrease would have decreased the 2016 and 2015 postretirement benefit obligation by $1.4 million and $2.1 million, respectively and decreased the total service and interest cost components by $0.1 million in both the years ended December 31, 2016 and 2015.
The components of net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 were as follows:
 
Pension
 
Postretirement
 
Years Ended December 31,
 
Years Ended December 31,
Components of net periodic benefit cost:
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Service cost

$15.6

 

$16.8

 

$10.2

 

$1.5

 

$1.7

 

$1.1

Interest cost
52.4

 
51.3

 
33.3

 
9.4

 
9.4

 
6.5

Expected return on plan assets
(71.1
)
 
(82.8
)
 
(54.6
)
 
(5.8
)
 
(7.1
)
 
(4.6
)
Amortization of prior service cost
0.6

 
0.6

 
0.5

 
1.1

 
1.1

 
0.6

Net remeasurement losses (gains)
73.4

 
5.7

 
98.3

 
6.3

 
(12.2
)
 
15.9

Allocated benefit cost from Timken

 

 
5.2

 

 

 
2.2

Net Periodic Benefit Cost

$70.9

 

($8.4
)
 

$92.9

 

$12.5

 

($7.1
)


$21.7



As discussed above, prior to the spinoff, employees of TimkenSteel participated in various retirement and postretirement benefits sponsored by The Timken Company. Because Timken provided these benefits to eligible employees and retirees of TimkenSteel, the costs to participating employees of TimkenSteel in these plans were reflected in the Consolidated Financial Statements, while the related assets and liabilities were retained by Timken. Expense allocations for these benefits were determined based on a review of personnel by business unit and based on allocations of corporate and other shared functional personnel. All cost allocations related to the various retirement benefit plans have been deemed paid by TimkenSteel to Timken in the period in which the cost was recorded in the Consolidated Statements of Operations as a component of cost of products sold and selling, general and administrative expenses. Allocated benefit cost from Timken were funded through intercompany transactions, which were reflected within the net parent investment on the Consolidated Balance Sheets.
TimkenSteel recognizes its overall responsibility to ensure that the assets of its various defined benefit pension plans are managed effectively and prudently and in compliance with its policy guidelines and all applicable laws. Preservation of capital is important; however, TimkenSteel also recognizes that appropriate levels of risk are necessary to allow its investment managers to achieve satisfactory long-term results consistent with the objectives and the fiduciary character of the pension funds. Asset allocations are established in a manner consistent with projected plan liabilities, benefit payments and expected rates of return for various asset classes. The expected rate of return for the investment portfolios is based on expected rates of return for various asset classes, as well as historical asset class and fund performance. The target allocations for plan assets are 15% equity securities, 60% debt securities and 25% in all other types of investments.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:
Level 1 -
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 -
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3 -
Unobservable inputs for the asset or liability.
The following table presents the fair value hierarchy for those investments of TimkenSteel’s pension assets measured at fair value on a recurring basis as of December 31, 2016:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$45.2


$4.6


$40.6


$—

U.S government and agency securities
220.3

214.2

6.1


Corporate bonds
105.2


105.2


Equity securities
52.2

52.2



Mutual fund - equity
15.3


15.3


Mutual fund - real estate
24.8

24.8



Total Assets in the fair value hierarchy

$463.0


$295.8


$167.2


$—

Assets measured at net asset value (1)
668.7




Total Assets

$1,131.7


$295.8


$167.2


$—


(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, hedge funds, and risk parity investments. As of December 31, 2016, these assets are redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s pension assets measured at fair value on a recurring basis as of December 31, 2015:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$27.8


$2.1


$25.7


$—

U.S government and agency securities
220.7

213.1

7.6


Corporate bonds
125.6


125.6


Equity securities
78.8

78.8



Mutual fund - equity
16.1


16.1


Mutual fund - real estate
33.9

33.9



Total Assets in the fair value hierarchy

$502.9


$327.9


$175.0


$—

Assets measured at net asset value (1)
641.4




Total Assets

$1,144.3


$327.9


$175.0


$—

(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, and risk parity investments. As of December 31, 2015, these assets were redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s postretirement assets measured at fair value on a recurring basis as of December 31, 2016:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$1.4


$1.4


$—


$—

Total Assets in the fair value hierarchy

$1.4


$1.4


$—


$—

Assets measured at net asset value (1)
112.5




Total Assets

$113.9


$1.4


$—


$—


(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, hedge funds, and risk parity investments. As of December 31, 2016, these assets are redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s postretirement assets measured at fair value on a recurring basis as of December 31, 2015:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$1.0


$1.0


$—


$—

Total Assets in the fair value hierarchy

$1.0


$1


$—


$—

Assets measured at net asset value (1)
136.9




Total Assets

$137.9


$1.0


$—


$—


(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, and risk parity investments. As of December 31, 2015, these assets were redeemable at net asset value within 90 days.

Future benefit payments are expected to be as follows:
 
 
 
Postretirement
Benefit Payments:
Pension
 
Gross
 
Medicare Part D Subsidy Receipts
2017

$78.2

 

$20.3

 

$0.7

2018
88.1

 
19.8

 
0.7

2019
76.2

 
19.3

 
0.8

2020
75.2

 
18.4

 
0.9

2021
75.8

 
17.6

 
0.9

2022-2026
373.8

 
77.2

 
5.0


The Company expects to make contributions to its U.K. pension plan in 2017 of approximately $1.4 million.
Defined Contribution Plans
Prior to the spinoff, substantially all of TimkenSteel’s employees in the U.S. and employees at certain non-U.S. locations participated in defined contribution retirement and savings plans sponsored by Timken. TimkenSteel established similar defined contribution plans in connection with the spinoff. The Company recorded expense primarily related to employer matching contributions to these defined contribution plans of $4.6 million in 2016, $5.8 million in 2015 and $4.7 million in 2014.
Earnings Per Share
Earnings Per Share
Earnings Per Share
On June 30, 2014, 45.4 million TimkenSteel common shares were distributed to Timken shareholders in conjunction with the spinoff. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this number of shares was assumed to be outstanding as of the beginning of each period prior to the spinoff in the calculation of basic weighted average shares. In addition, for the dilutive weighted average share calculations, the dilutive securities outstanding at June 30, 2014 were assumed to also be outstanding as of the beginning of each period prior to the spinoff.
Basic earnings (loss) per share are computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share are computed based upon the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents calculated using the treasury stock method or if-converted method. For the Convertible Notes, the Company utilizes the if-converted method to calculate diluted earnings (loss) per share. Under the if-converted method, the Company adjusts net earnings to add back interest expense (including amortization of debt discount) recognized on the Convertible Notes and includes the number of shares potentially issuable related to the Convertible Notes in the weighted average shares outstanding. Treasury stock is excluded from the denominator in calculating both basic and diluted earnings (loss) per share.
For the years ended December 31, 2016, 2015 and 2014, 2.8 million, 2.0 million and 0.1 million of shares issuable for equity-based awards, respectively, were excluded from the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive. In periods in which a net loss has occurred, as is the case for years ended December 31, 2016 and 2015, the dilutive effect of equity-based awards is not recognized and thus not utilized in the calculation of diluted earnings (loss) per share, because the effect of their inclusion would have been anti-dilutive. The shares potentially issuable of 6.9 million, related to the Convertible Notes, were also anti-dilutive for the year ended December 31, 2016.

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the years ended December 31, 2016, 2015 and 2014:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Numerator:
 
 
 
 
 
Net (loss) income for basic and diluted earnings per share

($105.5
)
 

($45.0
)
 

$46.1

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted average shares outstanding, basic
44,217,577

 
44,533,725

 
45,541,705

Dilutive effect of stock-based awards

 

 
502,438

Weighted average shares outstanding, diluted
44,217,577

 
44,533,725

 
46,044,143

 
 
 
 
 
 
Basic (loss) earnings per share

($2.39
)
 

($1.01
)
 

$1.01

Diluted (loss) earnings per share

($2.39
)
 

($1.01
)
 

$1.00

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
Description of the Plan
Prior to the spinoff, employees of Timken’s steel business, now TimkenSteel, were eligible to participate in The Timken Company Long-Term Incentive Plan (Timken LTIP Plan) and The Timken Company 2011 Long-Term Incentive Plan (Timken 2011 Plan) and were eligible to receive Timken stock-based awards including stock options, restricted share awards and performance-based restricted share units. Effective June 30, 2014, TimkenSteel employees and non-employee directors began participating in the TimkenSteel Corporation 2014 Equity and Incentive Compensation Plan. On April 28, 2016, shareholders of TimkenSteel approved the amendment and restatement of the TimkenSteel Corporation 2014 Equity and Incentive Compensation Plan to, among other matters, increase the number of shares available for awards and to adjust the fungible share adjustment factor going forward. The TimkenSteel Corporation Amended and Restated 2014 Equity and Incentive Compensation Plan is referred to herein as the TimkenSteel 2014 Plan.
The TimkenSteel 2014 Plan authorizes the Compensation Committee of the TimkenSteel Board of Directors to grant non-qualified or incentive stock options, stock appreciation rights, stock awards (including restricted shares, restricted share unit awards, performance shares, performance units, deferred shares and common shares) and cash awards to TimkenSteel employees and non-employee directors. No more than 11.05 million TimkenSteel common shares may be delivered under the TimkenSteel 2014 Plan. The TimkenSteel 2014 Plan contains fungible share counting mechanics, which generally means that awards other than stock options and stock appreciation rights will be counted against the aggregate share limit as 2.50 common shares for every one common share that is actually issued or transferred under such awards. The TimkenSteel 2014 Plan authorized up to 3.0 million common shares for use in granting “replacement awards” to current holders of Timken equity awards under Timken’s equity compensation plans at the time of the spinoff.
As of December 31, 2016, approximately 6.1 million shares of TimkenSteel common stock remained available for grants under the TimkenSteel 2014 Plan.
In connection with the spinoff, stock compensation awards granted under the Timken LTIP Plan and the Timken 2011 Plan were adjusted as follows:
Vested and unvested stock options were adjusted so that the grantee holds options to purchase both Timken and TimkenSteel common shares.
The adjustment to the Timken and TimkenSteel stock options, when combined, were intended to generally preserve the intrinsic value of each original option grant and the ratio of the exercise price to the fair market value of Timken common shares on June 30, 2014.
Unvested restricted stock awards were replaced with adjusted, substitute awards for restricted shares or units, as applicable, of Timken and TimkenSteel common shares. The new awards of restricted stock were intended to generally preserve the intrinsic value of the original award determined as of June 30, 2014.
Vesting periods of awards were unaffected by the adjustment and substitution.

Awards granted in connection with the adjustment of awards originally issued under the Timken LTIP Plan and the Timken 2011 Plan are referred to as replacement awards under the TimkenSteel 2014 Plan and, as noted above, reduce the maximum number of TimkenSteel common shares available for delivery under the TimkenSteel 2014 Plan. TimkenSteel records compensation expense for both TimkenSteel and Timken common shares for awards held by TimkenSteel employees only.
As discussed in Note 2 - Significant Accounting Policies, TimkenSteel early adopted Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” in the fourth quarter of 2016, with the effect recorded as of January 1, 2016. Under ASU 2016-09, TimkenSteel recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the Consolidated Statements of Operations.
The following table provides the significant assumptions used to calculate the grant date fair market values of options granted using a Black-Scholes option pricing method:
 
2016
 
2015
 
2014
Subsequent to Spinoff
 
2014
Prior to Spinoff
Weighted-average fair value per option
$3.32
 
$11.21
 
$18.43
 
$23.17
Risk-free interest rate
1.34%
 
1.47%
 
1.78%
 
1.80%
Dividend yield
—%
 
1.93%
 
1.22%
 
1.75%
Expected stock volatility
41.71%
 
47.10%
 
47.00%
 
50.35%
Expected life - years
6
 
6
 
6
 
6


The expected life of stock option awards granted is based on historical data and represents the period of time that options granted are expected to be held prior to exercise. Because of the absence of adequate stock price history of TimkenSteel common stock, expected volatility related to stock option awards granted subsequent to the spinoff is based on the historical volatility of a selected group of peer companies’ stock. Prior to the spinoff, volatility was calculated using the historical volatility of Timken stock. Expected annual dividends per share are estimated using the most recent dividend payment per share as of the grant date. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The following summarizes TimkenSteel stock option activity from January 1, 2016 to December 31, 2016:
 
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term
Aggregate Intrinsic Value (millions)
Outstanding as of December 31, 2015
1,617,503


$28.68

 
 
Granted
644,580


$7.47

 
 
Exercised
(6,825
)

$11.24

 
 
Canceled, forfeited or expired
(35,861
)

$24.05

 
 
Outstanding as of December 31, 2016
2,219,397


$22.64

6.22
$5.5
Options expected to vest
968,982


$15.90

8.53
$5.1
Options exercisable
1,239,280


$27.82

4.41
$0.4
Stock options presented in this table represent TimkenSteel awards only, including those held by Timken employees.
The total intrinsic value, the cash proceeds and the related tax benefit associated with stock options exercised during the period from January 1, 2016 to December 31, 2016 each were less than $0.1 million.
The following summarizes TimkenSteel stock-settled restricted share award activity from January 1, 2016 to December 31, 2016:
 
Number of Shares
Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2015
339,410


$30.31

Granted
426,090


$7.16

Vested
(38,641
)

$30.60

Canceled, forfeited or expired
(30,706
)

$3.93

Outstanding as of December 31, 2016
696,153


$17.57

Restricted share awards presented in this table represent TimkenSteel awards only, including those held by Timken employees.
TimkenSteel recognized stock-based compensation expense of $6.7 million ($4.2 million after tax), $7.0 million ($4.3 million after tax) and $6.0 million ($3.8 million after tax) for the years ended December 31, 2016, 2015 and 2014, respectively, related to stock option awards and stock-settled restricted share awards. 2014 compensation expense includes the recognition of $0.3 million of incremental compensation expense in the second quarter of 2014 resulting from the adjustment and substitution of stock-settled awards. The adjustment of the stock compensation awards occurred in conjunction with the distribution of TimkenSteel common shares to Timken shareholders in the June 30, 2014 after-market distribution.
Outstanding restricted share awards include restricted shares, restricted stock units, performance-based restricted stock units and deferred shares that will settle in common shares. Outstanding restricted shares and restricted stock units generally cliff-vest after three years or vest in 25% increments annually beginning on the first anniversary of the date of grant. Performance-based restricted stock units vest based on achievement of specified performance objectives.
As of December 31, 2016, unrecognized compensation cost related to stock option awards and stock-settled restricted shares and restricted stock units was $7.3 million, which is expected to be recognized over a weighted average period of 1.6 years. The calculations of unamortized expense and weighted-average periods include awards based on both TimkenSteel and Timken stock awards held by TimkenSteel employees.
Certain restricted stock units, including performance-based restricted stock units, are settled in cash and were adjusted and substituted as described above. TimkenSteel accrued $0.8 million and $1.6 million as of December 31, 2016 and 2015, respectively, which was included in salaries, wages and benefits, and other non-current liabilities on the Consolidated Balance Sheets. TimkenSteel paid $1.0 million and $2.9 million for cash-settled restricted stock units during 2016 and 2015, respectively.
Segment Information
Segment Information
Segment Information
TimkenSteel manufactures alloy steel, as well as carbon and micro-alloy steel, with an annual melt capacity of approximately 2 million tons and shipment capacity of 1.5 million tons. TimkenSteel’s portfolio includes SBQ bars, seamless mechanical tubing (tubes) and value-add solutions, such as precision steel components. In addition, TimkenSteel supplies machining and thermal treatment services, as well as manages raw material recycling programs, which are used as a feeder system for the Company’s melt operations. The Company’s products and services are used in a diverse range of demanding applications in the following market sectors: oil and gas; oil country tubular goods; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture; and power generation.

The SBQ bars and tubes production processes take place at the Company’s Canton, Ohio manufacturing location. This location accounts for all of the SBQ bars and seamless mechanical tubes the Company produces and includes three manufacturing facilities: the Faircrest, Harrison, and Gambrinus facilities. TimkenSteel’s value-add solutions production processes take place at three downstream manufacturing facilities: TimkenSteel Material Services, Tryon Peak, and St. Clair. Many of the production processes are integrated, and the manufacturing facilities produce products that are sold in all of the Company’s market sectors. As a result, investments in the Company’s facilities and resource allocation decisions affecting the Company’s operations are designed to benefit the overall business of the Company, not any specific aspect of the business.

Effective January 1, 2016, TimkenSteel eliminated its segment reporting as a result of organizational changes made in the second half of 2015, in addition to the integrated nature of the Company’s business as described above. These organizational changes were made to better align resources to support the business strategy of operating in a leaner, more efficient environment. Specifically, the Company has centralized its customer-facing activities under one leadership role and eliminated the former two segment operating structure. Since that change, the Company is organized in a centralized manner based on functionality. As a result, TimkenSteel conducts its business activities and reports financial results as one business segment.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business under the realigned organization and is consistent with the manner in which the Chief Operating Decision Maker (CODM) evaluates performance and makes resource and operating decisions for the business as described above. Furthermore the Company notes that monitoring financial results as one reportable segment helps the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations.

Geographic Information
Net sales by geographic area are reported by the country in which the customer is domiciled. Long-lived assets include property, plant and equipment and intangible assets subject to amortization. Long-lived assets by geographic area are reported by the location of the TimkenSteel operations to which the asset is attributed.
 
Years Ended December 31,
 
2016
 
2015
Net Sales:
 
 
 
United States

$763.4

 

$979.5

Foreign
106.1

 
126.7

 

$869.5

 

$1,106.2


 
December 31,
 
2016
2015
Long-lived Assets:
 
 
United States

$766.6


$799.3

Foreign
0.3

0.6

 

$766.9


$799.9

Income Tax Provision
Income Tax Provision
Income Tax Provision
(Loss) income from operations before income taxes, based on geographic location of the operations to which such earnings are attributable, is provided below.
 
Years Ended December 31,
 
2016
 
2015
 
2014
United States

($136.2
)
 

($82.2
)
 

$69.0

Non-United States
(5.8
)
 
10.5

 
(0.3
)
(Loss) income from operations before income taxes

($142.0
)
 

($71.7
)
 

$68.7



The (benefit) provision for income taxes consisted of the following:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Current:
 
 
 
 
 
Federal

$—

 

$—

 

$32.3

State and local
0.1

 
(1.2
)
 
5.3

Foreign
0.2

 
0.1

 
0.5

 

$0.3

 

($1.1
)
 

$38.1

Deferred:
 
 
 
 
 
Federal

($32.9
)
 

($28.7
)
 

($10.4
)
State and local
(3.6
)
 
0.2

 
(3.5
)
Foreign
(0.3
)
 
2.9

 
(1.6
)
 
(36.8
)
 
(25.6
)
 
(15.5
)
United States and foreign tax (benefit) expense on (loss) income

($36.5
)
 

($26.7
)
 

$22.6


For the year ended December 31, 2016, TimkenSteel made no U.S. state tax payments and, as of December 31, 2016, had $0.5 million of refundable overpayments of state incomes and no federal income taxes. For the year ended December 31, 2015, TimkenSteel made $0.5 million in U.S. state payments, and as of December 31, 2015, had refundable overpayments of federal income taxes of $6.9 million and state income taxes of $1.7 million. The Company recorded these receivables as a component of prepaid expenses on the Consolidated Balance Sheets.
The reconciliation between TimkenSteel’s effective tax rate on income (loss) from continuing operations and the statutory tax rate is as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Tax at the U.S. federal statutory rate

($49.7
)
 

($25.2
)
 

$24.2

Adjustments:
 
 
 
 
 
State and local income taxes, net of federal tax benefit
(3.5
)
 
(2.2
)
 
1.1

Foreign earnings taxed at different rates including tax holidays
(0.1
)
 

 

U.S. domestic manufacturing deduction

 

 
(3.2
)
U.S. research tax credit
(0.4
)
 
(0.5
)
 
(0.6
)
Valuation allowance
15.6

 

 

Other items, net
1.6

 
1.2

 
1.1

(Benefit) provision for income taxes

($36.5
)
 

($26.7
)
 

$22.6

Effective income tax rate
25.7
%
 
37.2
%
 
32.9
%

Income tax expense includes U.S. and international income taxes. Except as required under U.S. tax law, U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the U.S. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. Undistributed earnings of foreign subsidiaries outside of the U.S. were $1.6 million, $1.6 million and $1.5 million at December 31, 2016, 2015 and 2014, respectively. The Company recognized a deferred tax liability in the amount of $0.1 million during 2016 for current-year earnings at its Chinese subsidiary, as those earnings are not permanently reinvested by the Company.
The effect of temporary differences giving rise to deferred tax assets and liabilities at December 31, 2016 and 2015 was as follows:
 
December 31,
 
2016
 
2015
Deferred tax assets:
 
 
 
Pension and postretirement benefits

$70.3

 

$34.6

Other employee benefit accruals
9.1

 
7.2

Tax loss carryforwards
107.4

 
63.7

Intangible assets
2.5

 
2.9

Inventory
2.9

 
2.9

State decoupling
0.5

 
1.6

Other, net
5.3

 
3.7

Deferred tax assets subtotal

$198.0

 

$116.6

Valuation allowances
(24.4
)
 
(10.2
)
Deferred tax assets
173.6

 
106.4

Deferred tax liabilities:
 
 
 
Depreciation

($156.8
)
 

($136.3
)
Inventory
(9.7
)
 
(1.0
)
Convertible debt
(6.6
)
 

Other, net
(0.2
)
 
(1.1
)
Deferred tax liabilities subtotal
(173.3
)
 
(138.4
)
Net deferred tax assets (liabilities)

$0.3

 

($32.0
)

As of December 31, 2016, net deferred tax assets of $0.3 million are recorded as a component of other non-current assets on the Consolidated Balance Sheets.
As of December 31, 2016, TimkenSteel had loss carryforwards in the U.S. and various non-U.S. jurisdictions totaling $306.5 million having various expirations dates. TimkenSteel has provided valuation allowances of $24.4 million against these carryforwards. The majority of the non-U.S. loss carryforwards represent local country net operating losses for branches of TimkenSteel or entities treated as branches of TimkenSteel under U.S. tax law. Tax benefits have been recorded for these losses in the U.S. The related local country net operating loss carryforwards are offset fully by valuation allowances.
During 2016, operating losses generated in the U.S. resulted in a decrease in the carrying value of the Company’s U.S. deferred tax liability to the point that would result in a net U.S. deferred tax asset at December 31, 2016. In light of TimkenSteel’s recent operating performance in the U.S. and current industry conditions, the Company assessed, based upon all available evidence, and concluded that it was more likely than not that it would not realize its U.S. deferred tax assets. As a result, in the fourth quarter of 2016, the Company recorded a $15.6 million full valuation allowance on its net U.S. deferred tax asset. Going forward, the need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries will cause variability in the Company’s effective tax rate. The Company will maintain a full valuation allowance against its deferred tax assets in the U.S. and applicable foreign countries until sufficient positive evidence exists to eliminate them.
As of December 31, 2016, TimkenSteel had no total gross unrecognized tax benefits, and no amounts which represented unrecognized tax benefits that would favorably impact TimkenSteel’s effective income tax rate in any future periods if such benefits were recognized. As of December 31, 2016, TimkenSteel does not anticipate a change in its unrecognized tax positions during the next 12 months. TimkenSteel had no accrued interest and penalties related to uncertain tax positions as of December 31, 2016. TimkenSteel records interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2015, TimkenSteel had no total gross unrecognized tax benefits and no amount of unrecognized tax benefits that would favorably impact TimkenSteel’s effective income tax rate in any future periods if such benefits were recognized. TimkenSteel had no interest and penalties related to uncertain tax positions as of December 31, 2015. TimkenSteel records interest and penalties related to uncertain tax positions as a component of (benefit) provision for income taxes.
The reconciliation of TimkenSteel’s total gross unrecognized tax benefits is as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Beginning balance, January 1

$—

 

$—

 

$0.7

Tax positions related to prior years:
 
 
 
 
 
Reductions

 

 
(0.7
)
Ending balance, December 31

$—

 

$—

 

$—


As of December 31, 2016, Timken is subject to examination by the IRS for tax years 2006 to 2009 and 2012 to the present. Timken also is subject to tax examination in various U.S. state and local tax jurisdictions for tax years 2006 to the present. Timken also is subject to tax examination in various foreign tax jurisdictions, including Mexico, China and the U.K. for tax years 2002 to the present. TimkenSteel is subject to examination by the IRS for the period June 30, 2014 through December 31, 2016. TimkenSteel also is subject to tax examinations in various foreign tax jurisdictions, including Mexico, China, Poland, Singapore and the U.K. for the period June 30, 2014 through December 31, 2016.
Contingencies
Contingencies
Contingencies
TimkenSteel has a number of loss exposures incurred in the ordinary course of business, such as environmental claims, product warranty claims, and litigation. Establishing loss reserves for these matters requires management’s estimate and judgment regarding risk exposure and ultimate liability or realization. These loss reserves are reviewed periodically and adjustments are made to reflect the most recent facts and circumstances. As of December 31, 2016 and 2015, TimkenSteel had contingency reserves related to loss exposures incurred in the ordinary course of business of $0.2 million and $0.5 million, respectively.
Environmental Matters
From time to time, TimkenSteel may be a party to lawsuits, claims or other proceedings related to environmental matters and/or may receive notices of potential violations of environmental laws and regulations from the U.S. Environmental Protection Agency (EPA) and similar state or local authorities. TimkenSteel recorded reserves for such environmental matters as other current and non-current liabilities on the Consolidated Balance Sheets. Accruals related to such environmental matters represent management’s best estimate of the fees and costs associated with these matters. Although it is not possible to predict with certainty the outcome of such matters, management believes that their ultimate dispositions should not have a material adverse effect on TimkenSteel’s financial position, cash flows, or results of operations.
The following summarizes TimkenSteel contingency reserves and activity related to EPA matters from January 1, 2015 to December 31, 2016:
Beginning balance, January 1, 2015

$1.3

Expenses

Payments
(0.5
)
Ending balance, December 31, 2015

$0.8

Expenses

Payments
(0.2
)
Ending balance, December 31, 2016

$0.6

Restructuring Charges
Restructuring Charges
Restructuring Charges

During the second quarter of 2015, TimkenSteel approved and began implementing a cost reduction plan that resulted in the reduction of TimkenSteel’s salaried and hourly headcount. As a result, TimkenSteel recognized restructuring charges consisting of severance, benefits and other associated expenses of $0.3 million and $5.6 million for the years ended December 31, 2016 and 2015. TimkenSteel recorded reserves for such restructuring charges as other current liabilities on the Consolidated Balance Sheets. The following is a roll forward of the consolidated restructuring accrual for the years ended December 31, 2016 and 2015:
Beginning balance, January 1, 2015

$—

Expenses
5.6

Payments
(3.3
)
Ending balance, December 31, 2015

$2.3

Expenses
0.3

Payments
(2.5
)
Ending balance, December 31, 2016

$0.1

Selected Quarterly Financial Data (Unaudited)
Selected Quarterly Financial Data (Unaudited)
Selected Quarterly Financial Data (Unaudited)
(dollars in millions, except per share data)

The following selected quarterly operating results for each quarter of fiscal 2016 and 2015 have been adjusted to reflect the change in accounting principle and correction of immaterial errors as described in Note 1 - Company and Basis of Presentation:
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2016
 
 
 
 
 
 
 
Net Sales

$214.7

 

$213.8

 

$223.1

 

$217.9

Gross (Loss) Profit
(44.7
)
 
(6.2
)
 
15.3

 
8.5

Net (Loss) Income (1)
(67.0
)
 
(22.2
)
 
(6.6
)
 
(9.7
)
Per Share Data: (2) 
 
 
 
 
 
 
 
Basic (loss) earnings per share

($1.52
)
 

($0.50
)
 

($0.15
)
 

($0.22
)
Diluted (loss) earnings per share

($1.52
)
 

($0.50
)
 

($0.15
)
 

($0.22
)
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2015
 
 
 
 
 
 
 
Net Sales

$206.6

 

$232.7

 

$278.2

 

$388.7

Gross Profit
9.3

 
(12.3
)
 
2.1

 
47.1

Net Income (1)
(13.8
)
 
(24.5
)
 
(18.1
)
 
11.4

Per Share Data: (2) 
 
 
 
 
 
 
 
Basic earnings per share

($0.31
)
 

($0.55
)
 

($0.40
)
 

$0.25

Diluted earnings per share

($0.31
)
 

($0.55
)
 

($0.40
)
 

$0.25

Previously reported quarterly financial information for fiscal year 2016 and 2015 were as follows (in millions, except per share amounts):
 
Quarters Ended
 
September 30
 
June 30
 
March 31
2016
 
 
 
 
 
Net Sales

$213.8

 

$223.1

 

$217.9

Gross (Loss) Profit
2.5

 
10.2

 
3.4

Net Loss (1)
(16.6
)
 
(10.5
)
 
(13.6
)
Per Share Data: (2) 
 
 
 
 
 
Basic loss per share

($0.38
)
 

($0.24
)
 

($0.31
)
Diluted loss per share

($0.38
)
 

($0.24
)
 

($0.31
)
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2015
 
 
 
 
 
 
 
Net Sales

$206.6

 

$232.7

 

$278.2

 

$388.7

Gross (Loss) Profit
(6.2
)
 
(20.5
)
 
(6.1
)
 
41.6

Net (Loss) Income (1)
(24.2
)
 
(30.8
)
 
(24.3
)
 
6.9

Per Share Data: (2) 
 
 
 
 
 
 
 
Basic (loss) earnings per share

($0.55
)
 

($0.69
)
 

($0.54
)
 

$0.15

Diluted (loss) earnings per share

($0.55
)
 

($0.69
)
 

($0.54
)
 

$0.15


(1) Net Loss for the second, third, and fourth quarters of 2015 included restructuring charges of $1.6 million, $0.3 million and $3.7 million, respectively. The restructuring charges related to a cost reduction plan that reduced TimkenSteel’s salaried and hourly headcount. See Note 14 - Restructuring Charges in the Notes to the Consolidated Financial Statements.

(2) Basic and diluted earnings per share are computed independently for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not equal the total for the year. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this amount was assumed to be outstanding as of the beginning of each period presented prior to the spinoff in the calculation of basic weighted average shares. See Note 9 - Earnings Per Share in the Notes to the Consolidated Financial Statements.
Schedule II - Valuation and Qualifying Accounts
Schedule II - Valuation and Qualifying Accounts
Schedule II-Valuation and Qualifying Accounts

Allowance for uncollectible accounts:
2016
2015
2014
Balance at Beginning of Period

$1.5


$0.2


$0.2

Additions:
 
 
 
Charged to Costs and Expenses (1)
0.7

1.3


Deductions (2)
(0.1
)


Balance at End of Period

$2.1


$1.5


$0.2

 
 
 
 
Allowance for surplus and obsolete inventory:
2016
2015
2014
Balance at Beginning of Period

$8.4


$2.9


$1.9

Additions:
 
 
 
Charged to Costs and Expenses (3)
1.5

7.2

1.6

Deductions (4)
(1.8
)
(1.7
)
(0.6
)
Balance at End of Period

$8.1


$8.4


$2.9

 
 
 
 
Valuation allowance on deferred tax assets:
2016
2015
2014
Balance at Beginning of Period

$10.2


$11.7


$14.1

Additions:
 
 
 
Charged to Costs and Expenses (5)
15.6



Charged to Other Accounts (6)



Deductions (7)
(1.4
)
(1.5
)
(2.4
)
Balance at End of Period

$24.4


$10.2


$11.7

(1)
Provision for uncollectible accounts included in expenses.
(2)
Actual accounts written off against the allowance-net of recoveries.
(3)
Provisions for surplus and obsolete inventory included in expenses.
(4)
Inventory items written off against the allowance.
(5)
Increase in valuation allowance is recorded as a component of the provision for income taxes.
(6)
Includes valuation allowances recorded against other comprehensive income/loss or goodwill.
(7)
Amount primarily relates to foreign currency translation adjustments, the removal of losses not carried over to TimkenSteel and a decrease in U.K. tax rates.
Significant Accounting Policies (Policies)
Basis of Combination:
The Consolidated Financial Statements include the combined assets, liabilities, revenues and expenses related to TimkenSteel as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014. All significant intercompany accounts and transactions within TimkenSteel have been eliminated in the preparation of the Consolidated Financial Statements. All significant intercompany transactions with Timken prior to the spinoff are deemed to have been paid in the period the cost was incurred.
Use of Estimates:
The preparation of these Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. These estimates and assumptions are reviewed and updated regularly to reflect recent experience.
Revenue Recognition:
Revenue Recognition:
TimkenSteel recognizes revenue when title passes to the customer, which includes related-party sales to Timken and its subsidiaries for the periods prior to spinoff. This occurs at the shipping point except for goods sold by certain of the Company’s foreign entities and certain exported goods, where title passes when the goods reach their destination. Selling prices are fixed based on purchase orders or contractual arrangements. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold in the Consolidated Statements of Operations.
Cash Equivalents:
TimkenSteel considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Allowance for Doubtful Accounts:
TimkenSteel maintains an allowance for doubtful accounts, which represents an estimate of losses expected from the accounts receivable portfolio, to reduce accounts receivable to their net realizable value. The allowance is based upon historical trends in collections and write-offs, management’s judgment of the probability of collecting accounts and management’s evaluation of business risk. TimkenSteel extends credit to customers satisfying pre-defined credit criteria. TimkenSteel believes it has limited concentration of credit risk due to the diversity of its customer base.
Inventories, Net:
Inventories are valued at the lower of cost or market. The majority of TimkenSteel’s domestic inventories are valued by the last-in, first-out (LIFO) method. The remaining inventories, including manufacturing supplies inventory as well as international (outside the U.S.) inventories are valued by the first-in, first-out (FIFO), average cost or specific identification methods. Reserves are established for product inventory that is identified to be surplus and/or obsolete based on future requirements.
Property, Plant and Equipment, Net:
Property, plant and equipment, net are valued at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. The provision for depreciation is computed principally by the straight-line method based upon the estimated useful lives of the assets. The useful lives are approximately 30 years for buildings and three to 20 years for machinery and equipment.
Intangible Assets, Net:
Intangible assets subject to amortization are amortized on a straight-line method over their legal or estimated useful lives, with useful lives ranging from three to 15 years.
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350-40, “Internal-Use Software,” (ASC 350-40), TimkenSteel capitalizes certain costs incurred for computer software developed or obtained for internal use. TimkenSteel capitalizes substantially all external costs and qualifying internal costs related to the purchase and implementation of software projects used for business operations. Capitalized software costs primarily include purchased software and external consulting fees. Capitalized software projects are amortized over the estimated useful lives of the software.
Long-lived Asset Impairment:
Long-lived assets (including tangible assets and intangible assets subject to amortization) are reviewed for impairment when events or changes in circumstances have occurred indicating that the carrying value of the assets may not be recoverable.
TimkenSteel tests recoverability of long-lived assets at the lowest level for which there are identifiable cash flows that are independent from the cash flows of other assets. Assets and asset groups held and used are measured for recoverability by comparing the carrying amount of the asset or asset group to the sum of future undiscounted net cash flows expected to be generated by the asset or asset group.
Assumptions and estimates about future values and remaining useful lives of TimkenSteel’s long-lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in TimkenSteel’s business strategy and internal forecasts.
If an asset or asset group is considered to be impaired, the impairment loss that would be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. To determine fair value, TimkenSteel uses internal cash flow estimates discounted at an appropriate interest rate, third party appraisals, as appropriate, and/or market prices of similar assets, when available.
Product Warranties:
TimkenSteel accrues liabilities for warranties based upon specific claim incidents in accordance with accounting rules relating to contingent liabilities. Should TimkenSteel become aware of a specific potential warranty claim for which liability is probable and reasonably estimable, a specific charge is recorded and accounted for accordingly. TimkenSteel had no significant warranty claims for the years ended December 31, 2016, 2015 and 2014.
Income Taxes:
For the periods ending prior to and on June 30, 2014, income taxes, as presented herein, attribute current and deferred income taxes of Timken to the TimkenSteel standalone financial statements in a manner that is systematic, rational and consistent with the asset and liability method prescribed by the FASB ASC Topic 740, “Accounting for Income Taxes” (ASC 740). Accordingly, the TimkenSteel income tax provision was prepared following the “separate return method.” The separate return method applies ASC 740 to the standalone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions included in the financial statements of Timken may not be included in the Consolidated Financial Statements of TimkenSteel. Similarly, the tax treatment of certain items reflected in the Consolidated Financial Statements of TimkenSteel may not be reflected in the financial statements and tax returns of Timken; therefore, such items as alternative minimum tax, net operating losses, credit carryforwards, and valuation allowances may exist in the stand-alone financial statements that may or may not exist in Timken’s financial statements.
Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. TimkenSteel recognizes valuation allowances against deferred tax assets by tax jurisdiction when it is more likely than not that such assets will not be realized. Accruals for uncertain tax positions are provided for in accordance with ASC 740. TimkenSteel recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.
In general, the taxable income (loss) of various steel entities was included in Timken’s consolidated tax returns, where applicable, in jurisdictions around the world. As such, separate income tax returns were not prepared for any entities of TimkenSteel. Consequently, income taxes currently payable are deemed to have been remitted to Timken, in cash, in the period the liability arose and income taxes currently receivable are deemed to have been received from Timken in the period that a refund could have been recognized by TimkenSteel had TimkenSteel been a separate taxpayer. Accrued U.S. federal, state and certain foreign current income tax balances, including penalties and interest, are treated as being settled without payment as of the end of each year. Therefore, the settlement of the current income tax liability without payment is treated as a Parent contribution and is included in net transfer (to)/from Timken and affiliates in the accompanying Consolidated Statements of Shareholders’ Equity.
Following the spinoff on June 30, 2014, TimkenSteel accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. TimkenSteel recognizes deferred tax assets to the extent TimkenSteel believes these assets are more likely than not to be realized. In making such a determination, TimkenSteel considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If TimkenSteel determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, TimkenSteel would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. TimkenSteel records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) TimkenSteel determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, TimkenSteel recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
TimkenSteel recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets.
Foreign Currency Translation:
Assets and liabilities of subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected as a separate component of accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Operations.
Net Parent Investment:
Prior to the spinoff, Timken’s net investment in TimkenSteel was presented as net parent investment in lieu of stockholders’ equity. The Consolidated Statements of Shareholders’ Equity included net cash transfers and other property transfers between Timken and TimkenSteel. Timken performed cash management and other treasury-related functions on a centralized basis for nearly all of its legal entities, which included TimkenSteel. The net parent investment account included assets and liabilities incurred by Timken on behalf of TimkenSteel such as accrued liabilities related to corporate allocations including administrative expenses for legal, accounting, treasury, information technology, human resources and other services. Other assets and liabilities recorded by Timken, whose related income and expense had been pushed down to TimkenSteel, were also included in net parent investment.
All intercompany transactions effected through net parent investment in the accompanying Consolidated Balance Sheets were considered cash receipts and payments and are reflected in financing activities in the accompanying Consolidated Statements of Cash Flows.
Pension and Other Postretirement Benefits:
TimkenSteel recognizes an overfunded status or underfunded status (e.g., the difference between the fair value of plan assets and the benefit obligations) as either an asset or a liability for its defined benefit pension and other postretirement benefit plans on the Consolidated Balance Sheets. As discussed in Note 1 - Company and Basis of Presentation, on December 31, 2016, TimkenSteel voluntarily changed its accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for its defined benefit pension and other postretirement benefit plans. Prior to 2016, the Company amortized, as a component of pension and other postretirement expense, unrecognized actuarial gains and losses (included within accumulated other comprehensive income (loss)) over the average remaining service period of active employees expected to receive benefits under the plan, or average remaining life expectancy of inactive participants when all or almost all of plan participants are inactive. The Company historically has calculated the market-related value of plan assets based on a 5-year market adjustment. The value was determined by adjusting the fair value of plan assets to reflect the investment gains and losses during each of the last 5 years. The difference between the expected return on assets and actual return on assets was recognized at the rate of 20% per year (e.g., recognized over five years). Under the new principle, actuarial gains and losses are immediately recognized through net periodic benefit cost in the Statement of Operations upon the annual remeasurement at December 31, or on an interim basis as triggering events warrant remeasurement. In addition, the Company changed its accounting for measuring the market-related value of plan assets from a calculated amount (based on a five-year smoothing of asset returns) to fair value. The Company believes these changes are preferable, as they result in an accelerated recognition of changes in assumptions and market return on plan assets, as compared to the minimum amortization approach and market-related value of plan assets (i.e. the delayed approach). Additionally, the Company believes the new accounting principles provide a better representation of the operating results of the Company and the impact of its benefit obligations (through the income statement) in the period when changes occur.
Prior to the spinoff, certain of TimkenSteel’s employees participated in defined benefit pension and other postretirement benefit plans sponsored by Timken and accounted for by Timken in accordance with accounting guidance for defined benefit pension and other postretirement benefit plans. Expense allocations for these benefits were determined based on a review of personnel by business unit and based on allocations of corporate and other shared functional personnel.
Stock-Based Compensation:
TimkenSteel recognizes stock-based compensation expense based on the grant date fair value of the stock-based awards over their required vesting period on a straight-line basis, whether the awards were granted with graded or cliff vesting. Stock options are issued with an exercise price equal to the opening market price of TimkenSteel common shares on the date of grant. The fair value of stock options is determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. The fair value of stock-based awards that will settle in TimkenSteel common shares, other than stock options, is based on the opening market price of TimkenSteel common shares on the grant date. The fair values of stock-based awards that will settle in cash are remeasured at each reporting period until settlement of the awards.
TimkenSteel early adopted Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” in the fourth quarter of 2016, with the effect recorded as of January 1, 2016.
Under ASU 2016-09, TimkenSteel recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the consolidated statement of operations. The Company recorded an adjustment to beginning retained earnings of $4.2 million for previously unrecognized excess tax benefits. The excess tax benefits and tax deficiencies are considered discrete items in the reporting period they occur and are not included in the estimate of an entity’s annual effective tax rate.
TimkenSteel’s prior year additional paid in capital pool will be not be affected because those excess benefits have already been recognized in the financial statements, and the recognition of excess tax benefits and tax deficiencies in the income statement is prospective only in the fiscal year of adoption. As a result, there was not a reclassification between additional paid in capital and retained earnings in the fiscal years before adoption
Derivative Instruments:
TimkenSteel recognizes all derivatives on the Consolidated Balance Sheets at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. Forward contracts on various foreign currencies may be entered into in order to manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies. Other forward exchange contracts on various foreign currencies may be entered into in order to manage the foreign currency exchange rate risk associated with certain of TimkenSteel’s commitments denominated in foreign currencies.
Research and Development:
Expenditures for TimkenSteel research and development amounted to $8.0 million, $8.6 million and $8.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, and were recorded as a component of selling, general and administrative expenses in the Consolidated Statements of Operations. These expenditures may fluctuate from year to year depending on special projects and the needs of TimkenSteel and its customers.
The Company adopted the following standards during 2016, none of which had a material impact on the Consolidated Financial Statements or the related Notes to the Consolidated Financial Statements.

Standard
 
Effective Date
 
 
 
2015-05
Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
January 1, 2016
2016-09
Stock Compensation: Improvements to Employee Share-Based Payment Accounting - See Note 10
January 1, 2016
2015-03
Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs - See Note 6
March 31, 2016


Accounting Standards Issued But Not Yet Adopted
In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740). This ASU requires immediate recognition of the income tax consequences of intercompany asset transfers other than inventory. The ASU is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force),” The guidance is intended to reduce diversity in practice in how certain items are classified in the cash flow statement. It is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted, provided that all the issues addressed in the standard are adopted in the same period. Retrospective transition is required. TimkenSteel plans to adopt ASU 2016-15 effective January 1, 2017, and does not expect the adoption to have a material effect on its Statements of Cash Flows.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU changes how entities will measure credit losses for most financial assets, including trade and other receivables. This guidance will replace the current incurred loss approach with an expected loss model. It is effective for annual periods beginning after December 31, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for operating leases, and requires additional quantitative and qualitative disclosures. It is effective for annual reporting periods beginning after December 15, 2018. The Company regularly enters into operating leases. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory (Topic 330),” which requires that certain inventory be measured at the lower of cost or net realizable value. The guidance applies only to inventories for which cost is determined by methods other than last-in, first-out (LIFO). The Company values certain portions of its inventory using the FIFO, average cost, or specific identification methods. This standard is effective for annual reporting periods beginning after December 15, 2016. TimkenSteel plans to adopt this standard effective January 1, 2017, and does not expected the adoption to have a material effect its results of operations and financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition and will supersede Topic 605, “Revenue Recognition,” and most industry-specific guidance. Under ASU 2014-09 and the subsequently issued amendments, the core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required about the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. This standard is effective for annual reporting periods after December 15, 2017. TimkenSteel is currently evaluating the impact of the adoption of this ASU on its results of operations and financial condition. TimkenSteel anticipates adopting this standard using the modified retrospective approach as of January 1, 2018.

    

Company and Basis of Presentation (Tables)
ollowing table reflects the effect of the change in accounting principles on the 2016 Consolidated Financial Statements (dollars in millions, except per share data):

Increase (decrease)
 
Statement of Operations
 
Cost of products sold

$44.1

Selling, general and administrative expenses
5.5

Provision for income taxes

Net (loss) income
(49.6
)
Diluted earnings (loss) per share

($1.12
)

Statement of Comprehensive (Loss) Income, net of tax
 
Foreign currency translation adjustments

$2.3

Pension and postretirement adjustment
47.3


Balance Sheet
 
 
 
Additional paid in capital

($229.4
)
Retained deficit

($80.5
)
Accumulated other comprehensive loss
309.9


Statement of Cash Flows
 
 
 
Net (loss) income

($49.6
)
Pension and postretirement expense
49.6

The Company adopted the following standards during 2016, none of which had a material impact on the Consolidated Financial Statements or the related Notes to the Consolidated Financial Statements.

Standard
 
Effective Date
 
 
 
2015-05
Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
January 1, 2016
2016-09
Stock Compensation: Improvements to Employee Share-Based Payment Accounting - See Note 10
January 1, 2016
2015-03
Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs - See Note 6
March 31, 2016

The following tables reflect the impact to the financial statement line items as a result of the change in accounting principles and the correction of immaterial errors discussed above for the prior periods presented in the accompanying financial statements (dollars in millions, except per share data):

Statement of Operations
2015
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net sales

$1,106.2


$—


$1,106.2

 

$1,674.2


$—


$1,674.2

Cost of products sold
1,097.4

(37.4
)
1,060.0

 
1,400.4

72.7

1,473.1

Gross Profit
8.8

37.4

46.2

 
273.8

(72.7
)
201.1

Selling, general and administrative expenses
111.0

(5.9
)
105.1

 
112.1

16.8

128.9

Impairment and restructuring charges
6.5


6.5

 
1.2


1.2

Operating (Loss) Income
(108.7
)
43.3

(65.4
)
 
160.5

(89.5
)
71.0

Interest expense
3.4


3.4

 
0.9


0.9

Other expenses, net
2.9


2.9

 
1.4


1.4

(Loss) Income Before Income Taxes
(115.0
)
43.3

(71.7
)
 
158.2

(89.5
)
68.7

(Benefit) provision for income taxes
(42.6
)
15.9

(26.7
)
 
53.8

(31.2
)
22.6

Net (Loss) Income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
Basic (loss) earnings per share

($1.63
)

$0.62


($1.01
)
 

$2.29


($1.28
)

$1.01

Diluted (loss) earnings per share

($1.63
)

$0.62


($1.01
)
 

$2.27


($1.27
)

$1.00


Statement of Comprehensive (Loss) Income, net of tax
 
2015
 
 
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net (loss) income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
(1.5
)
0.4

(1.1
)
 
(1.2
)
0.9

(0.3
)
Pension and postretirement adjustment
35.0

(29.7
)
5.3

 
(58.6
)
59.2

0.6

Correction of pension and postretirement adjustment (1)

(4.3
)
(4.3
)
 



Total pension and postretirement liability adjustments, net of tax
35.0

(34.0
)
1.0

 
(58.6
)
59.2

0.6

Other comprehensive income (loss), net of tax
33.5

(33.6
)
(0.1
)
 
(59.8
)
60.1

0.3

Comprehensive (Loss) Income, net of tax

($38.9
)

($6.2
)

($45.1
)
 

$44.6


$1.8


$46.4

(1) Adjustment to correct immaterial errors associated with the fair market value of the Company’s U.K. pension plan and deferred taxes related to other comprehensive income recognized during 2015.

Balance Sheet
2015
 
As Reported
Adjustments
Adjusted
Other Assets
 
 
 
Correction to non-current pension assets (1)

$20.0


$0.7


$20.7

 
 
 
 
Non-Current Liabilities
 
 
 
Deferred income taxes

$26.9


$—


$26.9

Correction to deferred income taxes (1)

5.1

5.1

Total deferred income taxes

$26.9


$5.1


$32.0

 
 
 
 
Shareholders’ Equity
 
 
 
Additional paid-in-capital

$1,058.2


($229.4
)

$828.8

Retained earnings (deficit)

($61.7
)

($30.9
)

($92.6
)
Accumulated other comprehensive income

($263.8
)

$260.2


($3.6
)
Correction to accumulated other comprehensive loss (1)

(4.3
)
(4.3
)
Total accumulated other comprehensive income

($263.8
)

$255.9


($7.9
)
(1) Adjustment to correct immaterial errors associated with the fair market value of the Company’s U.K. pension plan and deferred taxes related to other comprehensive income recognized during 2015.

Cash Flows from Operating Activities
2015
 
2014
 
As Reported
Adjustments
Adjusted
 
As Reported
Adjustments
Adjusted
Net (loss) income

($72.4
)

$27.4


($45.0
)
 

$104.4


($58.3
)

$46.1

Deferred income taxes
(41.5
)
15.9

(25.6
)
 
1.4

(31.2
)
(29.8
)
Pension and postretirement expense
30.7

(46.2
)
(15.5
)
 
14.9

92.3

107.2

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Inventories, net
119.9

2.8

122.7

 
(66.8
)
(2.8
)
(69.6
)
Net Cash Provided by Operating Activities
107.1


107.1

 
93.9


93.9

Significant Accounting Policies (Tables)
The following table is a reconciliation of the amounts related to the spinoff, presented in the Consolidated Statements of Shareholders’ Equity as net transfer (to)/from Timken and affiliates and the amounts presented as net transfers from/(to) Timken and affiliates on the Consolidated Statements of Cash Flows.
 
Year Ended
 
December 31, 2014
Net transfer (to)/from Timken and affiliates - Equity

($62.0
)
Dividend paid to Timken
50.0

Net transfer of (assets) and liabilities from Timken
25.0

Settlement of (assets) and liabilities with Timken
(9.2
)
Cash received from Timken for settlement of separation
3.0

Net transfers from/(to) Timken and affiliates - Cash Flow

$6.8

ollowing table reflects the effect of the change in accounting principles on the 2016 Consolidated Financial Statements (dollars in millions, except per share data):

Increase (decrease)
 
Statement of Operations
 
Cost of products sold

$44.1

Selling, general and administrative expenses
5.5

Provision for income taxes

Net (loss) income
(49.6
)
Diluted earnings (loss) per share

($1.12
)

Statement of Comprehensive (Loss) Income, net of tax
 
Foreign currency translation adjustments

$2.3

Pension and postretirement adjustment
47.3


Balance Sheet
 
 
 
Additional paid in capital

($229.4
)
Retained deficit

($80.5
)
Accumulated other comprehensive loss
309.9


Statement of Cash Flows
 
 
 
Net (loss) income

($49.6
)
Pension and postretirement expense
49.6

The Company adopted the following standards during 2016, none of which had a material impact on the Consolidated Financial Statements or the related Notes to the Consolidated Financial Statements.

Standard
 
Effective Date
 
 
 
2015-05
Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
January 1, 2016
2016-09
Stock Compensation: Improvements to Employee Share-Based Payment Accounting - See Note 10
January 1, 2016
2015-03
Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs - See Note 6
March 31, 2016
Inventories (Tables)
Schedule of Components of Inventories
The components of inventories, net as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Inventories, net:

 
 
Manufacturing supplies

$37.9

 

$43.3

Raw materials
16.2

 
14.6

Work in process
58.6

 
59.5

Finished products
59.6

 
64.9

Subtotal
172.3

 
182.3

Allowance for surplus and obsolete inventory
(8.1
)
 
(8.4
)
Total Inventories, net

$164.2

 

$173.9

Property, Plant and Equipment (Tables)
Schedule of Property, Plant and Equipment
The components of property, plant and equipment, net as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Property, Plant and Equipment, net:

 
 
Land

$13.3

 

$13.4

Buildings and improvements
420.6

 
418.2

Machinery and equipment
1,352.0

 
1,298.2

Construction-in-progress
63.9

 
74.9

Subtotal
1,849.8

 
1,804.7

Less allowances for depreciation
(1,107.9
)
 
(1,035.4
)
Property, Plant and Equipment, net

$741.9

 

$769.3

Intangible Assets (Tables)
The components of intangible assets, net as of December 31, 2016 and 2015 were as follows:
 
December 31, 2016
 
December 31, 2015
 
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
 Accumulated Amortization
 
Net Carrying Amount
 
Intangible Assets Subject to Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships

$6.3

 

$3.7

 

$2.6

 

$6.8

 

$3.7

 

$3.1

 
Technology use
9.0

 
5.2

 
3.8

 
9.0

 
4.7

 
4.3

 
Capitalized software
58.9

 
40.3

 
18.6

 
57.9

 
34.7

 
23.2

 
Total Intangible Assets

$74.2

 

$49.2

 

$25.0

 

$73.7

 

$43.1

 

$30.6

 
Based upon the intangible assets subject to amortization as of December 31, 2016, TimkenSteel’s estimated annual amortization expense for the five succeeding years is shown below (in millions):
Year
Amortization Expense
2017

$6.3

2018
5.1

2019
4.0

2020
2.9

2021
1.0

Financing Arrangements (Tables)
The components of the Convertible Notes as of December 31, 2016 are as follows:
Principal

$86.3

Less: Debt issuance costs, net of amortization
(2.1
)
Less: Debt discount, net of amortization
(17.8
)
Convertible notes, net

$66.4

The following table sets forth total interest expense recognized related to the Convertible Notes for the year ended December 31, 2016:
Contractual interest expense

$3.0

Amortization of debt issuance costs
0.2

Amortization of debt discount
1.7

Total

$4.9

The components of other long-term debt as of December 31, 2016 and 2015 were as follows:
 
December 31,
 
2016
 
2015
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.71% as of December 31, 2016)

$12.2

 

$12.2

Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.70% as of December 31, 2016)
9.5

 
9.5

Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.70% as of December 31, 2016)
8.5

 
8.5

Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
40.0

 
170.0

Total Other Long-Term Debt

$70.2

 

$200.2

Accumulated Other Comprehensive Loss (Tables)
Schedule of Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss for the years ended December 31, 2016 and 2015 by component are as follows:
 
Foreign Currency Translation Adjustments
 
Pension and Postretirement Liability Adjustments
 
Total
Balance at December 31, 2014

($3.9
)
 

($3.9
)
 

($7.8
)



 


 


Other comprehensive (loss) income before reclassifications, before income tax
(1.1
)
 

 
(1.1
)
Amounts reclassified from accumulated other comprehensive loss, before income tax

 
1.7

 
1.7

Income tax (expense)

 
(0.7
)
 
(0.7
)
Net current period other comprehensive income, net of income taxes
(1.1
)
 
1.0

 
(0.1
)
Balance at December 31, 2015
(5.0
)
 
(2.9
)
 
(7.9
)



 


 


Other comprehensive (loss) income before reclassifications, before income tax
(2.0
)
 
(0.9
)
 
(2.9
)
Amounts reclassified from accumulated other comprehensive loss, before income tax

 
1.7

 
1.7

Income tax (expense)

 
(0.3
)
 
(0.3
)
Net current period other comprehensive (loss) income, net of income taxes
(2.0
)
 
0.5

 
(1.5
)
Balance at December 31, 2016
(7.0
)
 
(2.4
)
 
(9.4
)
Retirement and Postretirement Benefits (Tables)
The following tables set forth the change in benefit obligation, change in plan assets, funded status and amounts recognized on the Consolidated Balance Sheets for the defined benefit pension plans as of December 31, 2016 and 2015:
 
Pension
 
Postretirement
Change in benefit obligation:
2016
2015
 
2016
2015
Benefit obligation at the beginning of year

$1,163.5


$1,257.5

 

$215.3


$243.3

Service cost
15.6

16.8

 
1.5

1.7

Interest cost
52.4

51.3

 
9.4

9.4

Actuarial losses (gains)
81.1

(88.2
)
 
6.6

(19.9
)
Benefits paid
(79.1
)
(70.2
)
 
(19.5
)
(19.2
)
Plan amendment


 
0.9


Foreign currency translation adjustment
(13.2
)
(3.7
)
 


Benefit obligation at the end of year

$1,220.3


$1,163.5

 

$214.2


$215.3

 
Pension
 
Postretirement
Change in plan assets:
2016
2015
 
2016
2015
Fair value of plan assets at the beginning of year

$1,144.3


$1,230.0

 

$137.9


$142.6

Actual return on plan assets
78.7

(12.0
)
 
6.1

(0.6
)
Company contributions / payments
2.2

0.5

 
2.7

15.1

Benefits paid
(79.1
)
(70.2
)
 
(19.5
)
(19.2
)
Reimbursement from postretirement plan assets


 
(13.3
)

Foreign currency translation adjustment
(14.4
)
(4.0
)
 


Fair value of plan assets at end of year

$1,131.7


$1,144.3

 

$113.9


$137.9

Funded status at end of year

($88.6
)

($19.2
)


($100.3
)

($77.4
)
Amounts recognized on the balance sheet at December 31, 2016 and 2015, for TimkenSteel’s pension and postretirement benefit plans include:
 
Pension
 
Postretirement
 
2016
2015
 
2016
2015
Non-current assets

$6.2


$20.7

 

$—


$—

Current liabilities
(0.6
)
(0.6
)
 
(2.4
)
(2.6
)
Non-current liabilities
(94.2
)
(39.3
)
 
(97.9
)
(74.8
)
 

($88.6
)

($19.2
)
 

($100.3
)

($77.4
)
Included in accumulated other comprehensive loss at December 31, 2016 and 2015, were the following before-tax amounts that had not been recognized in net periodic benefit cost:
 
Pension
 
Postretirement
 
2016
2015
 
2016
2015
Unrecognized prior service cost

$1.5


$2.1

 

$2.1


$2.4


Amounts expected to be amortized from accumulated other comprehensive loss and included in total net periodic benefit cost during the year ended December 31, 2017 are as follows:
 
Pension
 
Postretirement
 
 
 
 
Prior service cost

$0.5

 

$1.0

The weighted-average assumptions used in determining benefit obligation as of December 31, 2016 and 2015 were as follows:
 
Pension
 
Postretirement
Assumptions:
2016
2015
 
2016
2015
Discount rate
4.17
%
4.67
%
 
4.09
%
4.51
%
Future compensation assumption
3.09
%
2.76
%
 
n/a

n/a

The weighted-average assumptions used in determining benefit cost for the years ended December 31, 2016 and 2015 were as follows:
 
Pension
 
Postretirement
Assumptions:
2016
2015
 
2016
2015
Discount rate
4.67
%
4.21
%
 
4.51
%
4.05
%
Future compensation assumption
3.08
%
3.09
%
 
n/a

n/a

Expected long-term return on plan assets
6.46
%
6.98
%
 
5.00
%
5.00
%
The components of net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 were as follows:
 
Pension
 
Postretirement
 
Years Ended December 31,
 
Years Ended December 31,
Components of net periodic benefit cost:
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Service cost

$15.6

 

$16.8

 

$10.2

 

$1.5

 

$1.7

 

$1.1

Interest cost
52.4

 
51.3

 
33.3

 
9.4

 
9.4

 
6.5

Expected return on plan assets
(71.1
)
 
(82.8
)
 
(54.6
)
 
(5.8
)
 
(7.1
)
 
(4.6
)
Amortization of prior service cost
0.6

 
0.6

 
0.5

 
1.1

 
1.1

 
0.6

Net remeasurement losses (gains)
73.4

 
5.7

 
98.3

 
6.3

 
(12.2
)
 
15.9

Allocated benefit cost from Timken

 

 
5.2

 

 

 
2.2

Net Periodic Benefit Cost

$70.9

 

($8.4
)
 

$92.9

 

$12.5

 

($7.1
)


$21.7

The following table presents the fair value hierarchy for those investments of TimkenSteel’s pension assets measured at fair value on a recurring basis as of December 31, 2016:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$45.2


$4.6


$40.6


$—

U.S government and agency securities
220.3

214.2

6.1


Corporate bonds
105.2


105.2


Equity securities
52.2

52.2



Mutual fund - equity
15.3


15.3


Mutual fund - real estate
24.8

24.8



Total Assets in the fair value hierarchy

$463.0


$295.8


$167.2


$—

Assets measured at net asset value (1)
668.7




Total Assets

$1,131.7


$295.8


$167.2


$—


(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, hedge funds, and risk parity investments. As of December 31, 2016, these assets are redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s pension assets measured at fair value on a recurring basis as of December 31, 2015:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$27.8


$2.1


$25.7


$—

U.S government and agency securities
220.7

213.1

7.6


Corporate bonds
125.6


125.6


Equity securities
78.8

78.8



Mutual fund - equity
16.1


16.1


Mutual fund - real estate
33.9

33.9



Total Assets in the fair value hierarchy

$502.9


$327.9


$175.0


$—

Assets measured at net asset value (1)
641.4




Total Assets

$1,144.3


$327.9


$175.0


$—

(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, and risk parity investments. As of December 31, 2015, these assets were redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s postretirement assets measured at fair value on a recurring basis as of December 31, 2016:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$1.4


$1.4


$—


$—

Total Assets in the fair value hierarchy

$1.4


$1.4


$—


$—

Assets measured at net asset value (1)
112.5




Total Assets

$113.9


$1.4


$—


$—


(1) Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been classified in the fair value hierarchy. Such assets include common collective trusts that invest in equity securities and fixed income securities, limited partnerships, real estate partnerships, hedge funds, and risk parity investments. As of December 31, 2016, these assets are redeemable at net asset value within 90 days.

The following table presents the fair value hierarchy for those investments of TimkenSteel’s postretirement assets measured at fair value on a recurring basis as of December 31, 2015:
 
Total
Level 1
Level 2
Level 3
Assets:
 
 
 
 
Cash and cash equivalents

$1.0


$1.0


$—


$—

Total Assets in the fair value hierarchy

$1.0


$1


$—


$—

Assets measured at net asset value (1)
136.9




Total Assets

$137.9


$1.0


$—


$—

Future benefit payments are expected to be as follows:
 
 
 
Postretirement
Benefit Payments:
Pension
 
Gross
 
Medicare Part D Subsidy Receipts
2017

$78.2

 

$20.3

 

$0.7

2018
88.1

 
19.8

 
0.7

2019
76.2

 
19.3

 
0.8

2020
75.2

 
18.4

 
0.9

2021
75.8

 
17.6

 
0.9

2022-2026
373.8

 
77.2

 
5.0

Earnings Per Share (Tables)
Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings Per Share
The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the years ended December 31, 2016, 2015 and 2014:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Numerator:
 
 
 
 
 
Net (loss) income for basic and diluted earnings per share

($105.5
)
 

($45.0
)
 

$46.1

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted average shares outstanding, basic
44,217,577

 
44,533,725

 
45,541,705

Dilutive effect of stock-based awards

 

 
502,438

Weighted average shares outstanding, diluted
44,217,577

 
44,533,725

 
46,044,143

 
 
 
 
 
 
Basic (loss) earnings per share

($2.39
)
 

($1.01
)
 

$1.01

Diluted (loss) earnings per share

($2.39
)
 

($1.01
)
 

$1.00

Stock-Based Compensation (Tables)
The following table provides the significant assumptions used to calculate the grant date fair market values of options granted using a Black-Scholes option pricing method:
 
2016
 
2015
 
2014
Subsequent to Spinoff
 
2014
Prior to Spinoff
Weighted-average fair value per option
$3.32
 
$11.21
 
$18.43
 
$23.17
Risk-free interest rate
1.34%
 
1.47%
 
1.78%
 
1.80%
Dividend yield
—%
 
1.93%
 
1.22%
 
1.75%
Expected stock volatility
41.71%
 
47.10%
 
47.00%
 
50.35%
Expected life - years
6
 
6
 
6
 
6
The following summarizes TimkenSteel stock option activity from January 1, 2016 to December 31, 2016:
 
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term
Aggregate Intrinsic Value (millions)
Outstanding as of December 31, 2015
1,617,503


$28.68

 
 
Granted
644,580


$7.47

 
 
Exercised
(6,825
)

$11.24

 
 
Canceled, forfeited or expired
(35,861
)

$24.05

 
 
Outstanding as of December 31, 2016
2,219,397


$22.64

6.22
$5.5
Options expected to vest
968,982


$15.90

8.53
$5.1
Options exercisable
1,239,280


$27.82

4.41
$0.4
Stock options presented in this table represent TimkenSteel awards only, including those held by Timken employees.
The following summarizes TimkenSteel stock-settled restricted share award activity from January 1, 2016 to December 31, 2016:
 
Number of Shares
Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2015
339,410


$30.31

Granted
426,090


$7.16

Vested
(38,641
)

$30.60

Canceled, forfeited or expired
(30,706
)

$3.93

Outstanding as of December 31, 2016
696,153


$17.57

Restricted share awards presented in this table represent TimkenSteel awards only, including those held by Timken employees.
Segment Information (Tables)
 
Years Ended December 31,
 
2016
 
2015
Net Sales:
 
 
 
United States

$763.4

 

$979.5

Foreign
106.1

 
126.7

 

$869.5

 

$1,106.2

 
December 31,
 
2016
2015
Long-lived Assets:
 
 
United States

$766.6


$799.3

Foreign
0.3

0.6

 

$766.9


$799.9

Income Tax Provision (Tables)
(Loss) income from operations before income taxes, based on geographic location of the operations to which such earnings are attributable, is provided below.
 
Years Ended December 31,
 
2016
 
2015
 
2014
United States

($136.2
)
 

($82.2
)
 

$69.0

Non-United States
(5.8
)
 
10.5

 
(0.3
)
(Loss) income from operations before income taxes

($142.0
)
 

($71.7
)
 

$68.7

The (benefit) provision for income taxes consisted of the following:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Current:
 
 
 
 
 
Federal

$—

 

$—

 

$32.3

State and local
0.1

 
(1.2
)
 
5.3

Foreign
0.2

 
0.1

 
0.5

 

$0.3

 

($1.1
)
 

$38.1

Deferred:
 
 
 
 
 
Federal

($32.9
)
 

($28.7
)
 

($10.4
)
State and local
(3.6
)
 
0.2

 
(3.5
)
Foreign
(0.3
)
 
2.9

 
(1.6
)
 
(36.8
)
 
(25.6
)
 
(15.5
)
United States and foreign tax (benefit) expense on (loss) income

($36.5
)
 

($26.7
)
 

$22.6

The reconciliation between TimkenSteel’s effective tax rate on income (loss) from continuing operations and the statutory tax rate is as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Tax at the U.S. federal statutory rate

($49.7
)
 

($25.2
)
 

$24.2

Adjustments:
 
 
 
 
 
State and local income taxes, net of federal tax benefit
(3.5
)
 
(2.2
)
 
1.1

Foreign earnings taxed at different rates including tax holidays
(0.1
)
 

 

U.S. domestic manufacturing deduction

 

 
(3.2
)
U.S. research tax credit
(0.4
)
 
(0.5
)
 
(0.6
)
Valuation allowance
15.6

 

 

Other items, net
1.6

 
1.2

 
1.1

(Benefit) provision for income taxes

($36.5
)
 

($26.7
)
 

$22.6

Effective income tax rate
25.7
%
 
37.2
%
 
32.9
%
The effect of temporary differences giving rise to deferred tax assets and liabilities at December 31, 2016 and 2015 was as follows:
 
December 31,
 
2016
 
2015
Deferred tax assets:
 
 
 
Pension and postretirement benefits

$70.3

 

$34.6

Other employee benefit accruals
9.1

 
7.2

Tax loss carryforwards
107.4

 
63.7

Intangible assets
2.5

 
2.9

Inventory
2.9

 
2.9

State decoupling
0.5

 
1.6

Other, net
5.3

 
3.7

Deferred tax assets subtotal

$198.0

 

$116.6

Valuation allowances
(24.4
)
 
(10.2
)
Deferred tax assets
173.6

 
106.4

Deferred tax liabilities:
 
 
 
Depreciation

($156.8
)
 

($136.3
)
Inventory
(9.7
)
 
(1.0
)
Convertible debt
(6.6
)
 

Other, net
(0.2
)
 
(1.1
)
Deferred tax liabilities subtotal
(173.3
)
 
(138.4
)
Net deferred tax assets (liabilities)

$0.3

 

($32.0
)
The reconciliation of TimkenSteel’s total gross unrecognized tax benefits is as follows:
 
Years Ended December 31,
 
2016
 
2015
 
2014
Beginning balance, January 1

$—

 

$—

 

$0.7

Tax positions related to prior years:
 
 
 
 
 
Reductions

 

 
(0.7
)
Ending balance, December 31

$—

 

$—

 

$—

Contingencies (Tables)
Summary of Contingency Reserves
The following summarizes TimkenSteel contingency reserves and activity related to EPA matters from January 1, 2015 to December 31, 2016:
Beginning balance, January 1, 2015

$1.3

Expenses

Payments
(0.5
)
Ending balance, December 31, 2015

$0.8

Expenses

Payments
(0.2
)
Ending balance, December 31, 2016

$0.6

Restructuring Charges (Tables)
Rollforward of Consolidated Restructuring Accrual
The following is a roll forward of the consolidated restructuring accrual for the years ended December 31, 2016 and 2015:
Beginning balance, January 1, 2015

$—

Expenses
5.6

Payments
(3.3
)
Ending balance, December 31, 2015

$2.3

Expenses
0.3

Payments
(2.5
)
Ending balance, December 31, 2016

$0.1



Selected Quarterly Financial Data (Unaudited) (Tables)
Schedule of Quarterly Financial Data
elected quarterly operating results for each quarter of fiscal 2016 and 2015 have been adjusted to reflect the change in accounting principle and correction of immaterial errors as described in Note 1 - Company and Basis of Presentation:
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2016
 
 
 
 
 
 
 
Net Sales

$214.7

 

$213.8

 

$223.1

 

$217.9

Gross (Loss) Profit
(44.7
)
 
(6.2
)
 
15.3

 
8.5

Net (Loss) Income (1)
(67.0
)
 
(22.2
)
 
(6.6
)
 
(9.7
)
Per Share Data: (2) 
 
 
 
 
 
 
 
Basic (loss) earnings per share

($1.52
)
 

($0.50
)
 

($0.15
)
 

($0.22
)
Diluted (loss) earnings per share

($1.52
)
 

($0.50
)
 

($0.15
)
 

($0.22
)
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2015
 
 
 
 
 
 
 
Net Sales

$206.6

 

$232.7

 

$278.2

 

$388.7

Gross Profit
9.3

 
(12.3
)
 
2.1

 
47.1

Net Income (1)
(13.8
)
 
(24.5
)
 
(18.1
)
 
11.4

Per Share Data: (2) 
 
 
 
 
 
 
 
Basic earnings per share

($0.31
)
 

($0.55
)
 

($0.40
)
 

$0.25

Diluted earnings per share

($0.31
)
 

($0.55
)
 

($0.40
)
 

$0.25

Previously reported quarterly financial information for fiscal year 2016 and 2015 were as follows (in millions, except per share amounts):
 
Quarters Ended
 
September 30
 
June 30
 
March 31
2016
 
 
 
 
 
Net Sales

$213.8

 

$223.1

 

$217.9

Gross (Loss) Profit
2.5

 
10.2

 
3.4

Net Loss (1)
(16.6
)
 
(10.5
)
 
(13.6
)
Per Share Data: (2) 
 
 
 
 
 
Basic loss per share

($0.38
)
 

($0.24
)
 

($0.31
)
Diluted loss per share

($0.38
)
 

($0.24
)
 

($0.31
)
 
Quarters Ended
 
December 31
 
September 30
 
June 30
 
March 31
2015
 
 
 
 
 
 
 
Net Sales

$206.6

 

$232.7

 

$278.2

 

$388.7

Gross (Loss) Profit
(6.2
)
 
(20.5
)
 
(6.1
)
 
41.6

Net (Loss) Income (1)
(24.2
)
 
(30.8
)
 
(24.3
)
 
6.9

Per Share Data: (2) 
 
 
 
 
 
 
 
Basic (loss) earnings per share

($0.55
)
 

($0.69
)
 

($0.54
)
 

$0.15

Diluted (loss) earnings per share

($0.55
)
 

($0.69
)
 

($0.54
)
 

$0.15


(1) Net Loss for the second, third, and fourth quarters of 2015 included restructuring charges of $1.6 million, $0.3 million and $3.7 million, respectively. The restructuring charges related to a cost reduction plan that reduced TimkenSteel’s salaried and hourly headcount. See Note 14 - Restructuring Charges in the Notes to the Consolidated Financial Statements.

(2) Basic and diluted earnings per share are computed independently for each of the periods presented. Accordingly, the sum of the quarterly earnings per share amounts may not equal the total for the year. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this amount was assumed to be outstanding as of the beginning of each period presented prior to the spinoff in the calculation of basic weighted average shares. See Note 9 - Earnings Per Share in the Notes to the Consolidated Financial Statements.

Company and Basis of Presentation - Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 9 Months Ended 12 Months Ended
Jun. 23, 2014
Sep. 30, 2016
segment
Dec. 31, 2016
segment
T
manufacturing_facility
Dec. 31, 2015
segment
Jun. 30, 2014
Entity Information [Line Items]
 
 
 
 
 
Annual melt capacity (in tons)
 
 
2,000,000 
 
 
Shipments (in tons)
 
 
1,500,000 
 
 
Distribution of outstanding common shares to Timken shareholders
 
 
 
 
100.00% 
Conversion of stock (in shares)
 
 
 
 
Number of manufacturing facilities
 
 
 
 
Number of operating segments
 
 
 
Number of business segments
 
 
 
Pension assets
 
 
$ 6.2 
$ 20.7 
 
Adjustments
 
 
 
 
 
Entity Information [Line Items]
 
 
 
 
 
Pension assets
 
 
 
0.7 
 
UK |
Adjustments
 
 
 
 
 
Entity Information [Line Items]
 
 
 
 
 
Deferred tax expense recognized in other comprehensive income
 
 
 
4.8 
 
Pension assets
 
 
 
$ 0.7 
 
Timken
 
 
 
 
 
Entity Information [Line Items]
 
 
 
 
 
Conversion of stock (in shares)
 
 
 
 
Company and Basis of Presentation - Change in Accounting (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2013
Dec. 31, 2015
Additional Paid-in Capital
Jun. 30, 2014
Additional Paid-in Capital
Dec. 31, 2013
Additional Paid-in Capital
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
Market adjustment period
 
5 years 
 
 
 
 
Amortization recognition percentage
 
20.00% 
 
 
 
 
Amortization recognition period
 
5 years 
 
 
 
 
Smoothing period for returns of plan assets
5 years 
 
 
 
 
 
Reduction of additional paid-in capital
 
$ (4.2)
$ 0 
$ 0 
$ 229.4 
$ 229.4 
Company and Basis of Presentation - Change in Accounting to Statement of Operations (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Cost of products sold
 
 
 
 
 
 
 
 
$ 896.6 
$ 1,060.0 
$ 1,473.1 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
101.5 
105.1 
128.9 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
(36.5)
(26.7)
22.6 
Net (loss) income
(67.0)
(22.2)
(6.6)
(9.7)
(13.8)
(24.5)
(18.1)
11.4 
(105.5)
(45.0)
46.1 
Diluted (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.00 
Retained Earnings (Deficit)
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
 
 
 
 
 
 
 
(105.5)
(45.0)
(16.2)
Adjustments
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Cost of products sold
 
 
 
 
 
 
 
 
 
(37.4)
72.7 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
 
(5.9)
16.8 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
 
15.9 
(31.2)
Net (loss) income
 
 
 
 
 
 
 
 
 
27.4 
(58.3)
Diluted (loss) earnings per share (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.62 
$ (1.27)
Change in Accounting Principal for Recognizing Actuarial Gains and Losses and Expected Returns on Plan Assets for Defined Benefit Plans |
Adjustments
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Cost of products sold
 
 
 
 
 
 
 
 
44.1 
 
 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
5.5 
 
 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
 
 
 
 
 
 
 
(49.6)
 
 
Diluted (loss) earnings per share (in dollars per share)
 
 
 
 
 
 
 
 
$ (1.12)
 
 
Change in Accounting Principal for Recognizing Actuarial Gains and Losses and Expected Returns on Plan Assets for Defined Benefit Plans |
Adjustments |
Retained Earnings (Deficit)
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
 
 
 
 
 
 
 
$ (49.6)
 
 
Company and Basis of Presentation - Change in Accounting to Statement of Comprehensive (Loss) Income, net of tax (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Foreign currency translation adjustments
$ (2.0)
$ (1.1)
$ (0.3)
Pension and postretirement adjustment, net of tax
0.5 
1.0 
0.6 
Adjustments
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Foreign currency translation adjustments
 
0.4 
0.9 
Pension and postretirement adjustment, net of tax
 
(34.0)
59.2 
Change in Accounting Principal for Recognizing Actuarial Gains and Losses and Expected Returns on Plan Assets for Defined Benefit Plans |
Adjustments
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Foreign currency translation adjustments
2.3 
 
 
Pension and postretirement adjustment, net of tax
$ 47.3 
 
 
Company and Basis of Presentation - Change in Accounting to Balance Sheet (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Additional paid-in capital
$ 845.6 
$ 828.8 
Retained deficit
(193.9)
(92.6)
Accumulated other comprehensive loss
(9.4)
(7.9)
Adjustments
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Additional paid-in capital
 
(229.4)
Retained deficit
 
(30.9)
Accumulated other comprehensive loss
 
255.9 
Change in Accounting Principal for Recognizing Actuarial Gains and Losses and Expected Returns on Plan Assets for Defined Benefit Plans |
Adjustments
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Additional paid-in capital
(229.4)
 
Retained deficit
(80.5)
 
Accumulated other comprehensive loss
$ 309.9 
 
Company and Basis of Presentation - Change in Accounting to Statement of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
$ (105.5)
$ (45.0)
$ 46.1 
Pension and postretirement expense
83.4 
(15.5)
107.2 
Adjustments
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
 
27.4 
(58.3)
Pension and postretirement expense
 
(46.2)
92.3 
Change in Accounting Principal for Recognizing Actuarial Gains and Losses and Expected Returns on Plan Assets for Defined Benefit Plans |
Adjustments
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
(49.6)
 
 
Pension and postretirement expense
$ 49.6 
 
 
Company and Basis of Presentation - Immaterial Misstatement Correction (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2015
Adjustments
Dec. 31, 2015
UK
Adjustments
Deferred tax expense recognized in other comprehensive income
 
 
 
$ 4.8 
Pension assets
$ 6.2 
$ 20.7 
$ 0.7 
$ 0.7 
Company and Basis of Presentation - Immaterial Misstatements Correction to Impacts to Statement of Operations (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 214.7 
$ 213.8 
$ 223.1 
$ 217.9 
$ 206.6 
$ 232.7 
$ 278.2 
$ 388.7 
$ 869.5 
$ 1,106.2 
$ 1,674.2 
Cost of products sold
 
 
 
 
 
 
 
 
896.6 
1,060.0 
1,473.1 
Gross (Loss) Profit
(44.7)
(6.2)
15.3 
8.5 
9.3 
(12.3)
2.1 
47.1 
(27.1)
46.2 
201.1 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
101.5 
105.1 
128.9 
Impairment and restructuring charges
 
 
 
 
 
 
 
 
0.3 
6.5 
1.2 
Operating (Loss) Income
 
 
 
 
 
 
 
 
(128.9)
(65.4)
71.0 
Interest expense
 
 
 
 
 
 
 
 
11.4 
3.4 
0.9 
Other expense, net
 
 
 
 
 
 
 
 
1.7 
2.9 
1.4 
(Loss) Income Before Income Taxes
 
 
 
 
 
 
 
 
(142.0)
(71.7)
68.7 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
(36.5)
(26.7)
22.6 
Net (Loss) Income
(67.0)
(22.2)
(6.6)
(9.7)
(13.8)
(24.5)
(18.1)
11.4 
(105.5)
(45.0)
46.1 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.01 
Diluted (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.00 
As Reported
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
213.8 
223.1 
217.9 
206.6 
232.7 
278.2 
388.7 
 
1,106.2 
1,674.2 
Cost of products sold
 
 
 
 
 
 
 
 
 
1,097.4 
1,400.4 
Gross (Loss) Profit
 
2.5 
10.2 
3.4 
(6.2)
(20.5)
(6.1)
41.6 
 
8.8 
273.8 
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
 
111.0 
112.1 
Impairment and restructuring charges
 
 
 
 
 
 
 
 
 
6.5 
1.2 
Operating (Loss) Income
 
 
 
 
 
 
 
 
 
(108.7)
160.5 
Interest expense
 
 
 
 
 
 
 
 
 
3.4 
0.9 
Other expense, net
 
 
 
 
 
 
 
 
 
2.9 
1.4 
(Loss) Income Before Income Taxes
 
 
 
 
 
 
 
 
 
(115.0)
158.2 
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
 
(42.6)
53.8 
Net (Loss) Income
 
(16.6)
(10.5)
(13.6)
(24.2)
(30.8)
(24.3)
6.9 
 
(72.4)
104.4 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
 
$ (0.38)
$ (0.24)
$ (0.31)
$ (0.55)
$ (0.69)
$ (0.54)
$ 0.15 
 
$ (1.63)
$ 2.29 
Diluted (loss) earnings per share (in dollars per share)
 
$ (0.38)
$ (0.24)
$ (0.31)
$ (0.55)
$ (0.69)
$ (0.54)
$ 0.15 
 
$ (1.63)
$ 2.27 
Adjustments
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
 
Cost of products sold
 
 
 
 
 
 
 
 
 
(37.4)
72.7 
Gross (Loss) Profit
 
 
 
 
 
 
 
 
 
37.4 
(72.7)
Selling, general and administrative expenses
 
 
 
 
 
 
 
 
 
(5.9)
16.8 
Impairment and restructuring charges
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
 
 
 
 
 
 
 
 
43.3 
(89.5)
Interest expense
 
 
 
 
 
 
 
 
 
Other expense, net
 
 
 
 
 
 
 
 
 
(Loss) Income Before Income Taxes
 
 
 
 
 
 
 
 
 
43.3 
(89.5)
(Benefit) provision for income taxes
 
 
 
 
 
 
 
 
 
15.9 
(31.2)
Net (Loss) Income
 
 
 
 
 
 
 
 
 
$ 27.4 
$ (58.3)
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.62 
$ (1.28)
Diluted (loss) earnings per share (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.62 
$ (1.27)
Company and Basis of Presentation - Immaterial Misstatements Correction Impacts to Statement of Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$ (67.0)
$ (22.2)
$ (6.6)
$ (9.7)
$ (13.8)
$ (24.5)
$ (18.1)
$ 11.4 
$ (105.5)
$ (45.0)
$ 46.1 
Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
(2.0)
(1.1)
(0.3)
Pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
5.3 
0.6 
Correction of pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
(4.3)
Total pension and postretirement liability adjustments, net of tax
 
 
 
 
 
 
 
 
0.5 
1.0 
0.6 
Other comprehensive (loss) income, net of tax
 
 
 
 
 
 
 
 
(1.5)
(0.1)
0.3 
Comprehensive (Loss) Income, net of tax
 
 
 
 
 
 
 
 
(107.0)
(45.1)
46.4 
As Reported
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
(16.6)
(10.5)
(13.6)
(24.2)
(30.8)
(24.3)
6.9 
 
(72.4)
104.4 
Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
 
(1.5)
(1.2)
Pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
35.0 
(58.6)
Correction of pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
Total pension and postretirement liability adjustments, net of tax
 
 
 
 
 
 
 
 
 
35.0 
(58.6)
Other comprehensive (loss) income, net of tax
 
 
 
 
 
 
 
 
 
33.5 
(59.8)
Comprehensive (Loss) Income, net of tax
 
 
 
 
 
 
 
 
 
(38.9)
44.6 
Adjustments
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
 
 
 
 
 
 
 
 
27.4 
(58.3)
Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
 
0.4 
0.9 
Pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
(29.7)
59.2 
Correction of pension and postretirement adjustment
 
 
 
 
 
 
 
 
 
(4.3)
Total pension and postretirement liability adjustments, net of tax
 
 
 
 
 
 
 
 
 
(34.0)
59.2 
Other comprehensive (loss) income, net of tax
 
 
 
 
 
 
 
 
 
(33.6)
60.1 
Comprehensive (Loss) Income, net of tax
 
 
 
 
 
 
 
 
 
$ (6.2)
$ 1.8 
Company and Basis of Presentation - Immaterial Misstatements Correction Impacts to Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Other Assets
 
 
Pension assets
$ 6.2 
$ 20.7 
Non-Current Liabilities
 
 
Deferred income taxes
 
26.9 
Correction to deferred income taxes
 
5.1 
Total deferred income taxes
32.0 
Shareholders’ Equity
 
 
Additional paid-in capital
845.6 
828.8 
Retained deficit
(193.9)
(92.6)
Accumulated other comprehensive income
 
(3.6)
Correction to accumulated other comprehensive loss
 
(4.3)
Total accumulated other comprehensive income
(9.4)
(7.9)
As Reported
 
 
Other Assets
 
 
Pension assets
 
20.0 
Non-Current Liabilities
 
 
Deferred income taxes
 
26.9 
Correction to deferred income taxes
 
Total deferred income taxes
 
26.9 
Shareholders’ Equity
 
 
Additional paid-in capital
 
1,058.2 
Retained deficit
 
(61.7)
Accumulated other comprehensive income
 
(263.8)
Correction to accumulated other comprehensive loss
 
Total accumulated other comprehensive income
 
(263.8)
Adjustments
 
 
Other Assets
 
 
Pension assets
 
0.7 
Non-Current Liabilities
 
 
Deferred income taxes
 
Correction to deferred income taxes
 
5.1 
Total deferred income taxes
 
5.1 
Shareholders’ Equity
 
 
Additional paid-in capital
 
(229.4)
Retained deficit
 
(30.9)
Accumulated other comprehensive income
 
260.2 
Correction to accumulated other comprehensive loss
 
(4.3)
Total accumulated other comprehensive income
 
$ 255.9 
Company and Basis of Presentation - Immaterial Misstatement Correction Impacts to Cash Flows From Operating Activities (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
$ (105.5)
$ (45.0)
$ 46.1 
Deferred income taxes
(36.8)
(25.6)
(29.8)
Pension and postretirement expense
83.4 
(15.5)
107.2 
Changes in operating assets and liabilities:
 
 
 
Inventories, net
9.7 
122.7 
(69.6)
Net Cash Provided by Operating Activities
74.4 
107.1 
93.9 
As Reported
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
 
(72.4)
104.4 
Deferred income taxes
 
(41.5)
1.4 
Pension and postretirement expense
 
30.7 
14.9 
Changes in operating assets and liabilities:
 
 
 
Inventories, net
 
119.9 
(66.8)
Net Cash Provided by Operating Activities
 
107.1 
93.9 
Adjustments
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
Net (loss) income
 
27.4 
(58.3)
Deferred income taxes
 
15.9 
(31.2)
Pension and postretirement expense
 
(46.2)
92.3 
Changes in operating assets and liabilities:
 
 
 
Inventories, net
 
2.8 
(2.8)
Net Cash Provided by Operating Activities
 
$ 0 
$ 0 
Significant Accounting Policies - Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Market adjustment period
 
5 years 
 
 
Intangible asset useful life, minimum
3 years 
 
 
 
Intangible asset useful life, maximum
15 years 
 
 
 
Impairment charges and loss on sale or disposal of assets
$ 0 
$ 900,000.0 
$ 1,200,000.0 
 
Foreign currency exchange losses
800,000 
1,300,000 
1,100,000 
 
Cumulative effect of change in accounting principle
 
4,200,000 
 
Foreign currency forward contracts fair value (less than)
100,000 
100,000 
 
 
Research and development expense
8,000,000 
8,600,000 
8,500,000 
 
Amortization recognition percentage
 
20.00% 
 
 
Amortization recognition period
 
5 years 
 
 
Retained Earnings (Deficit)
 
 
 
 
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Cumulative effect of change in accounting principle
 
4,200,000 
 
Retained Earnings (Deficit) |
Accounting Standards Updated 2016-09 |
New Accounting Pronouncement, Early Adoption, Effect
 
 
 
 
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Cumulative effect of change in accounting principle
 
$ 4,200,000 
 
 
Building
 
 
 
 
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful lives
30 years 
 
 
 
Machinery and Equipment |
Minimum
 
 
 
 
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful lives
3 years 
 
 
 
Machinery and Equipment |
Maximum
 
 
 
 
Schedule of Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful lives
20 years 
 
 
 
Significant Accounting Policies - Net Transfer (to)/from Timken and Affiliates (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Accounting Policies [Abstract]
 
 
 
Net transfer (to)/from Timken and affiliates - Equity
 
 
$ (62.0)
Dividend paid to Timken
50.0 
Net transfer of (assets) and liabilities from Timken
 
 
25.0 
Settlement of (assets) and liabilities with Timken
 
 
(9.2)
Cash received from Timken for settlement of separation
 
 
3.0 
Net transfers from/(to) Parent and affiliates
$ 0 
$ (0.5)
$ 6.8 
Inventories - Schedule of Components of Inventories (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Inventory Disclosure [Abstract]
 
 
Manufacturing supplies
$ 37.9 
$ 43.3 
Raw materials
16.2 
14.6 
Work in process
58.6 
59.5 
Finished products
59.6 
64.9 
Subtotal
172.3 
182.3 
Allowance for surplus and obsolete inventory
(8.1)
(8.4)
Total Inventories, net
$ 164.2 
$ 173.9 
Inventories - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Inventory Disclosure [Abstract]
 
 
Percentage of inventory valued by LIFO method
64.00% 
 
LIFO reserve
$ 44.6 
$ 49.6 
Decrease in LIFO reserve
$ 5.0 
$ 50.7 
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment [Abstract]
 
 
Land
$ 13.3 
$ 13.4 
Buildings and improvements
420.6 
418.2 
Machinery and equipment
1,352.0 
1,298.2 
Construction-in-progress
63.9 
74.9 
Subtotal
1,849.8 
1,804.7 
Less allowances for depreciation
(1,107.9)
(1,035.4)
Property, Plant and Equipment, net
$ 741.9 
$ 769.3 
Property, Plant and Equipment - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment [Line Items]
 
 
 
Depreciation
$ 68.0 
$ 67.2 
$ 50.8 
Capitalized interest
0.7 
1.0 
6.9 
Impairment charges
0.9 
0.3 
 
Timken
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Capitalized interest
 
 
$ 5.7 
- Components of Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 74.2 
$ 73.7 
Accumulated Amortization
49.2 
43.1 
Net Carrying Amount
25.0 
30.6 
Customer relationships
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
6.3 
6.8 
Accumulated Amortization
3.7 
3.7 
Net Carrying Amount
2.6 
3.1 
Technology use
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
9.0 
9.0 
Accumulated Amortization
5.2 
4.7 
Net Carrying Amount
3.8 
4.3 
Capitalized software
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
58.9 
57.9 
Accumulated Amortization
40.3 
34.7 
Net Carrying Amount
$ 18.6 
$ 23.2 
Intangible Assets - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Weighted-average useful life
 
8 years 1 month 6 days 
 
 
Amortization expense of intangible assets
 
$ 6.9 
$ 6.2 
$ 7.2 
Impairment charge for trade name
$ 0.9 
 
 
 
Customer relationships
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Weighted-average useful life
 
15 years 
 
 
Technology use
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Weighted-average useful life
 
15 years 
 
 
Capitalized software
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
Weighted-average useful life
 
6 years 3 months 18 days 
 
 
Intangible Assets - Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
2017
$ 6.3 
2018
5.1 
2019
4.0 
2020
2.9 
2021
$ 1.0 
Financing Arrangements - Narrative (Details) (USD $)
12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
Advanced Quench-and-Temper Facility
Dec. 31, 2016
Revolving Credit Facility
Dec. 31, 2015
Revolving Credit Facility
Dec. 31, 2016
Amended Credit Agreement
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
Minimum
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
Maximum
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
LIBOR
Minimum
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
LIBOR
Maximum
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
LIBOR
Machinery and Equipment
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
Prime Rate
Minimum
Dec. 31, 2016
Amended Credit Agreement
Revolving Credit Facility
Prime Rate
Maximum
Dec. 31, 2016
Amended Credit Agreement
Letter of Credit
Dec. 31, 2016
Amended Credit Agreement
Swingline Loan
Dec. 31, 2016
Convertible Notes
May 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021
May 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021, Additional Principal to Cover Over-Allotments
May 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021
Dec. 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021
Dec. 31, 2016
TimkenSteel Material Services, LLC [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 75,000,000 
$ 11,300,000 
 
 
 
Interest rate
 
 
 
 
 
 
 
4.80% 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
 
 
Conversion price (in dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 12.58 
 
 
Conversion rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.0795165 
 
Proceeds from issuance of convertible notes
86,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83,200,000 
 
 
Initial of principal amount
70,200,000 
200,200,000 
 
 
40,000,000 
170,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66,900,000 
66,400,000 
 
Effective interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.00% 
 
 
Portion of principal amount allocated to the conversion feature and recorded as a component of shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,400,000 
 
 
Transaction costs attributable to the liability component of convertible debt amortized to interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,400,000 
2,100,000 
 
Transaction costs attributable to the equity component included in shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
700,000 
 
 
Fair value of convertible notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
135,000,000 
 
 
 
 
 
Fair value of convertible debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
79.5165 
 
Multiples of principal which may be converted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
Conversion price observation period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40 days 
 
Repurchase price as a percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
Percentage of principal of which holders may declared principal to be due and payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.00% 
 
Percentage of principal allowed to be declared to be due and payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
Amount of credit facility
 
 
 
 
 
 
 
265,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of credit facility sublimit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,300,000.0 
26,500,000.0 
 
 
 
 
 
 
Debt covenant, minimum availability requirement
 
 
 
 
 
 
 
28,900,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt covenant, minimum availability requirement as a percent of aggregate commitments
 
 
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt covenant, minimum availability requirement in event of mandatory reduction of commitments
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt covenant, minimum availability requirement in event of mandatory reduction of commitments, as a percent of aggregate commitments
 
 
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt covenant, limit on capital expenditures in 2016
 
 
 
 
 
 
 
 
 
45,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt covenant, limit on capital expenditures in fiscal years after 2016
 
 
 
 
 
 
 
 
 
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis spread on variable rate
 
 
 
 
 
 
 
 
 
 
3.00% 
3.50% 
0.75% 
2.00% 
2.50% 
 
 
 
 
 
 
 
 
Commitment fee percentage
 
 
 
 
 
 
 
 
0.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of available under credit facility
 
 
 
 
 
 
38,200,000 
119,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount available under credit facility including block on availability
 
 
 
 
 
 
 
33,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bond ownership percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
Amount financed through the capital lease arrangement
 
 
 
10,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rent expense under operating leases
8,600,000 
11,000,000 
9,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, 2017
6,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, 2018
5,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, 2019
3,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, 2020
2,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, 2021
1,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future minimum lease payments for non-cancelable operating leases, due after 2021
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing Arrangements - Components of Convertible Debt (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021
May 31, 2016
Convertible Notes
Convertible Senior Notes Due 2021
Debt Instrument [Line Items]
 
 
 
 
Principal
 
 
$ 86.3 
 
Less: Debt issuance costs, net of amortization
 
 
(2.1)
(2.4)
Less: Debt discount, net of amortization
 
 
(17.8)
 
Convertible notes, net
$ 70.2 
$ 200.2 
$ 66.4 
$ 66.9 
Financing Arrangements - Components of Interest Expense (Details) (Convertible Notes, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Convertible Notes
 
Debt Instrument [Line Items]
 
Contractual interest expense
$ 3.0 
Amortization of debt issuance costs
0.2 
Amortization of debt discount
1.7 
Total
$ 4.9 
Financing Arrangements - Components of Long-Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
Other long-term debt
$ 70.2 
$ 200.2 
Amended Credit Agreement, due 2019 (LIBOR plus applicable spread)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
40.0 
170.0 
Variable-rate State of Ohio Water Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.71% as of December 31, 2016)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
12.2 
12.2 
Interest rate
0.71% 
 
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds, maturing on November 1, 2025 (0.70% as of December 31, 2016)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
9.5 
9.5 
Interest rate
0.70% 
 
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds, maturing on June 1, 2033 (0.70% as of December 31, 2016)
 
 
Debt Instrument [Line Items]
 
 
Other long-term debt
$ 8.5 
$ 8.5 
Interest rate
0.70% 
 
Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2013
Dec. 31, 2016
Foreign Currency Translation Adjustments
Dec. 31, 2015
Foreign Currency Translation Adjustments
Dec. 31, 2016
Pension and Postretirement Liability Adjustments
Dec. 31, 2015
Pension and Postretirement Liability Adjustments
Dec. 31, 2016
Accumulated Other Comprehensive Loss
Dec. 31, 2015
Accumulated Other Comprehensive Loss
Dec. 31, 2014
Accumulated Other Comprehensive Loss
Dec. 31, 2013
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$ 682.0 
$ 749.9 
$ 800.8 
$ (5.0)
$ (3.9)
$ (2.9)
$ (3.9)
$ (9.4)
$ (7.9)
$ (7.8)
$ (0.4)
Other comprehensive (loss) income before reclassifications, before income tax
(2.9)
(1.1)
 
(2.0)
(1.1)
(0.9)
 
 
 
 
Amounts reclassified from accumulated other comprehensive loss, before income tax
1.7 
1.7 
 
1.7 
1.7 
 
 
 
 
Income tax (expense)
(0.3)
(0.7)
 
(0.3)
(0.7)
 
 
 
 
Net current period other comprehensive income, net of income taxes
(1.5)
(0.1)
 
(2.0)
(1.1)
0.5 
1.0 
 
 
 
 
Ending balance
$ 597.4 
$ 682.0 
$ 800.8 
$ (7.0)
$ (5.0)
$ (2.4)
$ (2.9)
$ (9.4)
$ (7.9)
$ (7.8)
$ (0.4)
Retirement and Postretirement Benefits - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Employer contributions to defined contribution plans
$ 4.6 
$ 5.8 
$ 4.7 
Equity securities
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Target allocation percentage for plan assets
15.00% 
 
 
Debt Securities
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Target allocation percentage for plan assets
60.00% 
 
 
Other Investments
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Target allocation percentage for plan assets
25.00% 
 
 
Medical and Prescription Drug Benefits
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Annual rate of increase in per capita health cost
6.50% 
6.75% 
 
Ultimate rate of increase in per capita health cost
5.00% 
 
 
Year that ultimate rate of increase in per capital health cost occurs
2023 
 
 
HMO Benefits
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Annual rate of increase in per capita health cost
8.50% 
8.75% 
 
Ultimate rate of increase in per capita health cost
5.00% 
 
 
Year that ultimate rate of increase in per capital health cost occurs
2031 
 
 
Pension
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Assets transferred to plan
 
 
1,193.6 
Benefit obligations transferred to plan
 
 
1,134.8 
Accumulated other comprehensive losses transferred to plan
 
 
361.8 
Accumulated other comprehensive losses transferred to plan, net of tax
 
 
228.9 
Plan amendment
 
Benefit obligation
1,220.3 
1,163.5 
1,257.5 
Accumulated benefit obligation
1,192.1 
1,132.8 
 
Fair value of plan assets
1,131.7 
1,144.3 
1,230.0 
Pension |
UK
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Expected contributions to plan in 2017
1.4 
 
 
Pension |
Equity securities
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Fair value of plan assets
52.2 
78.8 
 
Postretirement
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Assets transferred to plan
 
 
130.1 
Benefit obligations transferred to plan
 
 
232.2 
Accumulated other comprehensive losses transferred to plan
 
 
8.2 
Accumulated other comprehensive losses transferred to plan, net of tax
 
 
5.0 
Plan amendment
0.9 
 
Benefit obligation
214.2 
215.3 
243.3 
Fair value of plan assets
113.9 
137.9 
142.6 
Effect of one percent increase in health care cost trend rate on postretirement benefit obligation
1.6 
2.3 
 
Effect of one percent increase in health care cost trend rate on service and interest cost components
0.1 
0.1 
 
Effect of one percent decrease in health care cost trend rate on postretirement benefit obligation
1.4 
2.1 
 
Effect of one percent decrease in health care cost trend rate on service and interest cost components
0.1 
0.1 
 
Pension Plans Where the Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Benefit obligation
886.5 
 
 
Accumulated benefit obligation
866.5 
 
 
Fair value of plan assets
$ 791.6 
 
 
Retirement and Postretirement Benefits - Change in Benefit Obligation (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Pension
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation at the beginning of year
$ 1,163.5 
$ 1,257.5 
 
Service cost
15.6 
16.8 
10.2 
Interest cost
52.4 
51.3 
33.3 
Actuarial losses (gains)
81.1 
(88.2)
 
Benefits paid
(79.1)
(70.2)
 
Plan amendment
 
Foreign currency translation adjustment
(13.2)
(3.7)
 
Benefit obligation at the end of year
1,220.3 
1,163.5 
1,257.5 
Postretirement
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation at the beginning of year
215.3 
243.3 
 
Service cost
1.5 
1.7 
1.1 
Interest cost
9.4 
9.4 
6.5 
Actuarial losses (gains)
6.6 
(19.9)
 
Benefits paid
(19.5)
(19.2)
 
Plan amendment
0.9 
 
Foreign currency translation adjustment
 
Benefit obligation at the end of year
$ 214.2 
$ 215.3 
$ 243.3 
Retirement and Postretirement Benefits - Change in Plan Assets (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
 
 
Funded status at end of year
   
 
Pension
 
 
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
 
 
Fair value of plan assets at the beginning of year
1,144.3 
1,230.0 
Actual return on plan assets
78.7 
(12.0)
Company contributions / payments
2.2 
0.5 
Benefits paid
(79.1)
(70.2)
Reimbursement from postretirement plan assets
Foreign currency translation adjustment
(14.4)
(4.0)
Fair value of plan assets at end of year
1,131.7 
1,144.3 
Funded status at end of year
(88.6)
(19.2)
Postretirement
 
 
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
 
 
Fair value of plan assets at the beginning of year
137.9 
142.6 
Actual return on plan assets
6.1 
(0.6)
Company contributions / payments
2.7 
15.1 
Benefits paid
(19.5)
(19.2)
Reimbursement from postretirement plan assets
(13.3)
Foreign currency translation adjustment
Fair value of plan assets at end of year
113.9 
137.9 
Funded status at end of year
$ (100.3)
$ (77.4)
Retirement and Postretirement Benefits - Amounts Recognized in Consolidated Financials (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Amounts Recognized in Balance Sheet
 
 
Non-current assets
$ 6.2 
$ 20.7 
Current liabilities
(3.0)
(3.2)
Non-current liabilities
(192.1)
(114.1)
Amounts Included in Accumulated Other Comprehensive Loss
 
 
Unrecognized prior service cost
2.1 
 
Pension
 
 
Amounts Recognized in Balance Sheet
 
 
Current liabilities
(0.6)
(0.6)
Non-current liabilities
(94.2)
(39.3)
Amounts recognized in the balance sheet
(88.6)
(19.2)
Amounts Included in Accumulated Other Comprehensive Loss
 
 
Unrecognized prior service cost
1.5 
2.1 
Amounts Expected to be Amortized from Accumulated Other Comprehensive Loss
 
 
Prior service cost
0.5 
 
Postretirement
 
 
Amounts Recognized in Balance Sheet
 
 
Non-current assets
Current liabilities
(2.4)
(2.6)
Non-current liabilities
(97.9)
(74.8)
Amounts recognized in the balance sheet
(100.3)
(77.4)
Amounts Included in Accumulated Other Comprehensive Loss
 
 
Unrecognized prior service cost
 
2.4 
Amounts Expected to be Amortized from Accumulated Other Comprehensive Loss
 
 
Prior service cost
$ 1.0 
 
Retirement and Postretirement Benefits - Weighted Average Assumptions Used in Determining Benefit Obligation and Benefit Cost (Details)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Weighted Average Assumptions Used in Determining Benefit Obligation
 
 
Discount rate
4.09% 
 
Weighted Average Assumptions Used in Determining Benefit Cost
 
 
Discount rate
4.51% 
 
Expected long-term return on plan assets
5.00% 
 
Pension
 
 
Weighted Average Assumptions Used in Determining Benefit Obligation
 
 
Discount rate
4.17% 
4.67% 
Future compensation assumption
3.09% 
2.76% 
Weighted Average Assumptions Used in Determining Benefit Cost
 
 
Discount rate
4.67% 
4.21% 
Future compensation assumption
3.08% 
3.09% 
Expected long-term return on plan assets
6.46% 
6.98% 
Postretirement
 
 
Weighted Average Assumptions Used in Determining Benefit Obligation
 
 
Discount rate
 
4.51% 
Weighted Average Assumptions Used in Determining Benefit Cost
 
 
Discount rate
 
4.05% 
Expected long-term return on plan assets
 
5.00% 
Retirement and Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Pension
 
 
 
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
 
 
 
Service cost
$ 15.6 
$ 16.8 
$ 10.2 
Interest cost
52.4 
51.3 
33.3 
Expected return on plan assets
(71.1)
(82.8)
(54.6)
Amortization of prior service cost
0.6 
0.6 
0.5 
Net remeasurement losses (gains)
73.4 
5.7 
98.3 
Allocated benefit cost from Timken
5.2 
Net Periodic Benefit Cost
70.9 
(8.4)
92.9 
Postretirement
 
 
 
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
 
 
 
Service cost
1.5 
1.7 
1.1 
Interest cost
9.4 
9.4 
6.5 
Expected return on plan assets
(5.8)
(7.1)
(4.6)
Amortization of prior service cost
1.1 
1.1 
0.6 
Net remeasurement losses (gains)
6.3 
(12.2)
15.9 
Allocated benefit cost from Timken
2.2 
Net Periodic Benefit Cost
$ 12.5 
$ (7.1)
$ 21.7 
Retirement and Postretirement Benefits - Fair Value Hierarchy of Plan Assets(Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Pension
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
$ 463.0 
$ 502.9 
 
Assets measured at net assets value
668.7 
641.4 
 
Total Assets
1,131.7 
1,144.3 
1,230.0 
Assets measured at net asset value, redemption period
90 days 
90 days 
 
Pension |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
295.8 
327.9 
 
Assets measured at net assets value
 
Total Assets
295.8 
327.9 
 
Pension |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
167.2 
175.0 
 
Assets measured at net assets value
 
Total Assets
167.2 
175.0 
 
Pension |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
 
Assets measured at net assets value
 
Total Assets
 
Pension |
Cash and cash equivalents
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
45.2 
27.8 
 
Pension |
Cash and cash equivalents |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
4.6 
2.1 
 
Pension |
Cash and cash equivalents |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
40.6 
25.7 
 
Pension |
Cash and cash equivalents |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
U.S government and agency securities
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
220.3 
220.7 
 
Pension |
U.S government and agency securities |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
214.2 
213.1 
 
Pension |
U.S government and agency securities |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
6.1 
7.6 
 
Pension |
U.S government and agency securities |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Corporate bonds
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
105.2 
125.6 
 
Pension |
Corporate bonds |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Corporate bonds |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
105.2 
125.6 
 
Pension |
Corporate bonds |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Equity securities
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
52.2 
78.8 
 
Pension |
Equity securities |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
52.2 
78.8 
 
Pension |
Equity securities |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Equity securities |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Mutual fund - equity
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
15.3 
16.1 
 
Pension |
Mutual fund - equity |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Mutual fund - equity |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
15.3 
16.1 
 
Pension |
Mutual fund - equity |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Mutual fund - real estate
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
24.8 
33.9 
 
Pension |
Mutual fund - real estate |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
24.8 
33.9 
 
Pension |
Mutual fund - real estate |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Pension |
Mutual fund - real estate |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Postretirement
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
1.4 
1.0 
 
Assets measured at net assets value
112.5 
136.9 
 
Total Assets
113.9 
137.9 
142.6 
Assets measured at net asset value, redemption period
 
90 days 
 
Postretirement |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
1.4 
1.0 
 
Assets measured at net assets value
 
Total Assets
1.4 
1.0 
 
Postretirement |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
 
Assets measured at net assets value
 
Total Assets
 
Postretirement |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets in the fair value hierarchy
 
Assets measured at net assets value
 
Total Assets
 
Postretirement |
Cash and cash equivalents
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
1.4 
1.0 
 
Postretirement |
Cash and cash equivalents |
Level 1
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
1.4 
1.0 
 
Postretirement |
Cash and cash equivalents |
Level 2
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
 
Postretirement |
Cash and cash equivalents |
Level 3
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Total Assets
$ 0 
$ 0 
 
- Future Benefit Payments (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Pension
 
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity
 
2017
$ 78.2 
2018
88.1 
2019
76.2 
2020
75.2 
2021
75.8 
2022-2026
373.8 
Postretirement
 
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity
 
2017
20.3 
2018
19.8 
2019
19.3 
2020
18.4 
2021
17.6 
2022-2026
77.2 
Prescription Drug Subsidy Receipts, Fiscal Year Maturity
 
2017
0.7 
2018
0.7 
2019
0.8 
2020
0.9 
2021
0.9 
2022-2026
$ 5.0 
Earnings Per Share - Narrative (Details)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2016
Equity-based Awards
Dec. 31, 2015
Equity-based Awards
Dec. 31, 2014
Equity-based Awards
Dec. 31, 2016
Convertible Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
 
Shares distributed to Timken shareholders in conjunction with spinoff (in shares)
45.4 
 
 
 
 
Shares issuable for equity-based awards excluded from the computation of diluted earnings per share because the effect of their inclusion would be anti-dilutive (in shares)
 
2.8 
2.0 
0.1 
6.9 
Earnings Per Share - Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings Per Share (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Numerator:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income for basic and diluted earnings per share
$ (67.0)
$ (22.2)
$ (6.6)
$ (9.7)
$ (13.8)
$ (24.5)
$ (18.1)
$ 11.4 
$ (105.5)
$ (45.0)
$ 46.1 
Denominator:
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic (in shares)
 
 
 
 
 
 
 
 
44,217,577 
44,533,725 
45,541,705 
Dilutive effect of stock-based awards (in shares)
 
 
 
 
 
 
 
 
502,438 
Weighted average shares outstanding, diluted (in shares)
 
 
 
 
 
 
 
 
44,217,577 
44,533,725 
46,044,143 
Basic (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.01 
Diluted (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.00 
Stock-Based Compensation - Significant Assumptions Used to Calculate the Grant Date Fair Value of Options Granted (Details)
6 Months Ended 12 Months Ended
Dec. 31, 2014
Jun. 30, 2014
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
 
Weighted-average fair value per option (in dollars per share)
$ 18.43 
$ 23.17 
$ 3.32 
$ 11.21 
Risk-free interest rate
1.78% 
1.80% 
1.34% 
1.47% 
Dividend yield
1.22% 
1.75% 
0.00% 
1.93% 
Expected stock volatility
47.00% 
50.35% 
41.71% 
47.10% 
Expected life - years
6 years 
6 years 
6 years 
6 years 
Stock-Based Compensation - Stock Option Activity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Number of Shares
 
Outstanding as of December 31, 2015 (in shares)
1,617,503 
Granted (in shares)
644,580 
Exercised (in shares)
(6,825)
Canceled, forfeited or expired (in shares)
(35,861)
Outstanding as of December 31, 2016 (in shares)
2,219,397 
Weighted Average Exercise Price
 
Outstanding as of December 31, 2015 (in dollars per share)
$ 28.68 
Granted (in dollars per share)
$ 7.47 
Exercised (in dollars per share)
$ 11.24 
Canceled, forfeited or expired (in dollars per share)
$ 24.05 
Outstanding as of December 31, 2016 (in dollars per share)
$ 22.64 
Options expected to vest
 
Number of Shares (in shares)
968,982 
Weighted Average Exercise Price (in dollars per share)
$ 15.90 
Weighted Average Remaining Contractual Term
8 years 6 months 11 days 
Aggregate Intrinsic Value (millions)
$ 5.1 
Additional Disclosures
 
Outstanding as of December 31, 2016, Weighted Average Remaining Contractual Term
6 years 2 months 19 days 
Outstanding as of December 31, 2016, Aggregate Intrinsic Value (millions)
5.5 
Options exercisable (in shares)
1,239,280 
Options exercisable (in dollars per share)
$ 27.82 
Options exercisable, Weighted Average Remaining Contractual Term
4 years 4 months 28 days 
Options exercisable, Aggregate Intrinsic Value (millions)
$ 0.4 
Stock-Based Compensation - Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of common shares which may be delivered under 2014 plan (in shares)
 
11,050,000 
 
 
Fungible shares per common share (in shares)
 
2.50 
 
 
Number of replacement shares authorized (in shares)
 
3,000,000 
 
 
Number of shares available for grant (in shares)
 
6,100,000 
 
 
Intrinsic value of stock options exercised (less than)
 
$ 0.1 
 
 
Cash proceeds from exercise of stock options (less than)
 
1.5 
5.8 
Tax benefit realized from exercise of stock options
 
0.1 
 
 
Stock-based compensation expense
 
 
7.0 
6.0 
Stock-based compensation expense, net of tax
 
4.2 
4.3 
3.8 
Incremental compensation expense
0.3 
 
 
 
Unrecognized compensation expense
 
7.3 
 
 
Unrecognized compensation expense, period for recognition
 
1 year 7 months 6 days 
 
 
Restricted stock unit liability
 
0.8 
1.6 
 
Cash settled restricted stock units
 
$ 1.0 
$ 2.9 
 
Restricted Share Awards
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Cliff-vest period
 
3 years 
 
 
Vesting percent
 
25.00% 
 
 
Stock-Based Compensation - Restricted Share Award Activity (Details) (Restricted Share Awards, USD $)
12 Months Ended
Dec. 31, 2016
Restricted Share Awards
 
Number of Shares
 
Outstanding as of December 31, 2015 (in shares)
339,410 
Granted (in shares)
426,090 
Vested (in shares)
(38,641)
Canceled, forfeited or expired (in shares)
(30,706)
Outstanding as of December 31, 2016 (in shares)
696,153 
Weighted Average Grant Date Fair Value
 
Outstanding as of December 31, 2015 (in dollars per share)
$ 30.31 
Granted (in dollars per share)
$ 7.16 
Vested (in dollars per share)
$ 30.60 
Canceled, forfeited or expired (in dollars per share)
$ 3.93 
Outstanding as of December 31, 2016 (in dollars per share)
$ 17.57 
Segment Information - Narrative (Details)
9 Months Ended 12 Months Ended
Sep. 30, 2016
segment
Dec. 31, 2016
segment
T
manufacturing_facility
Dec. 31, 2015
segment
Segment Reporting [Abstract]
 
 
 
Annual melt capacity (in tons)
 
2,000,000 
 
Shipments (in tons)
 
1,500,000 
 
Number of manufacturing facilities
 
 
Number of operating segments
 
Number of reportable segments
 
Segment Information - Geographic Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 214.7 
$ 213.8 
$ 223.1 
$ 217.9 
$ 206.6 
$ 232.7 
$ 278.2 
$ 388.7 
$ 869.5 
$ 1,106.2 
$ 1,674.2 
Long-lived Assets
799.9 
 
 
 
766.9 
 
 
 
799.9 
766.9 
 
United States
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
763.4 
979.5 
 
Long-lived Assets
766.6 
 
 
 
799.3 
 
 
 
766.6 
799.3 
 
Foreign
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
106.1 
126.7 
 
Long-lived Assets
$ 0.3 
 
 
 
$ 0.6 
 
 
 
$ 0.3 
$ 0.6 
 
Income Tax Provision - Income from Operations Before Income Taxes Based on Geographic Location of Operations (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
United States
$ (136.2)
$ (82.2)
$ 69.0 
Non-United States
(5.8)
10.5 
(0.3)
(Loss) Income Before Income Taxes
$ (142.0)
$ (71.7)
$ 68.7 
Income Tax Provision - (Benefit) Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current:
 
 
 
Federal
$ 0 
$ 0 
$ 32.3 
State and local
0.1 
(1.2)
5.3 
Foreign
0.2 
0.1 
0.5 
Current (benefit) provision for income taxes
0.3 
(1.1)
38.1 
Deferred:
 
 
 
Federal
(32.9)
(28.7)
(10.4)
State and local
(3.6)
0.2 
(3.5)
Foreign
(0.3)
2.9 
(1.6)
Deferred (benefit) provision for income taxes
(36.8)
(25.6)
(15.5)
United States and foreign tax (benefit) expense on (loss) income
$ (36.5)
$ (26.7)
$ 22.6 
Income Tax Provision - Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Income Tax Examination [Line Items]
 
 
 
 
Income taxes paid
$ 0 
$ 500,000 
 
 
Undistributed earnings of foreign subsidiaries
1,600,000 
1,600,000 
1,500,000 
 
Deferred tax liability for current year earnings of Chinese subsidiary where earnings are not permanently reinvested by the company
100,000 
 
 
 
Net deferred tax assets
300,000 
 
 
 
Operating loss carryforwards
306,500,000 
 
 
 
Operating loss carryforwards, valuation allowance
24,400,000 
 
 
 
Valuation allowances
24,400,000 
10,200,000 
 
 
Unrecognized tax benefits
700,000 
Unrecognized tax benefits that would impact tax rate
 
 
Interest and penalties related to unrecognized tax benefits
 
 
State
 
 
 
 
Income Tax Examination [Line Items]
 
 
 
 
Income tax refundable overpayments
500,000 
1,700,000 
 
 
Federal
 
 
 
 
Income Tax Examination [Line Items]
 
 
 
 
Income tax refundable overpayments
6,900,000 
 
 
Valuation allowances
$ 15,600,000 
 
 
 
Income Tax Provision - Reconciliation Between Effective Tax Rate on (Loss) Income from Continuing Operations and the Statutory Tax Rate (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Tax at the U.S. federal statutory rate
$ (49.7)
$ (25.2)
$ 24.2 
Adjustments:
 
 
 
State and local income taxes, net of federal tax benefit
(3.5)
(2.2)
1.1 
Foreign earnings taxed at different rates including tax holidays
(0.1)
U.S. domestic manufacturing deduction
(3.2)
U.S. research tax credit
(0.4)
(0.5)
(0.6)
Valuation allowance
15.6 
Other items, net
1.6 
1.2 
1.1 
United States and foreign tax (benefit) expense on (loss) income
$ (36.5)
$ (26.7)
$ 22.6 
Effective income tax rate
25.70% 
37.20% 
32.90% 
Income Tax Provision - Effect of Temporary Differences Giving Rise to Deferred Tax Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Deferred tax assets:
 
 
Pension and postretirement benefits
$ 70.3 
$ 34.6 
Other employee benefit accruals
9.1 
7.2 
Tax loss carryforwards
107.4 
63.7 
Intangible assets
2.5 
2.9 
Inventory
2.9 
2.9 
State decoupling
0.5 
1.6 
Other, net
5.3 
3.7 
Other, net
198.0 
116.6 
Valuation allowances
(24.4)
(10.2)
Deferred tax assets
173.6 
106.4 
Deferred tax liabilities:
 
 
Depreciation
(156.8)
(136.3)
Inventory
(9.7)
(1.0)
Convertible debt
(6.6)
Other, net
(0.2)
(1.1)
Deferred tax liabilities subtotal
173.3 
138.4 
Net deferred tax assets (liabilities)
0.3 
 
Net deferred tax assets (liabilities)
 
$ (32.0)
Income Tax Provision - Reconciliation of Gross Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Beginning balance, January 1
$ 0 
$ 0 
$ 0.7 
Tax positions related to prior years:
 
 
 
Reductions
(0.7)
Ending balance, December 31
$ 0 
$ 0 
$ 0 
Contingencies - Narrative (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
 
 
Contingency reserves
$ 0.2 
$ 0.5 
Restructuring Charges - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Dec. 31, 2016
Dec. 31, 2015
Restructuring and Related Activities [Abstract]
 
 
 
 
 
Restructuring charges
$ 3.7 
$ 0.3 
$ 1.6 
$ 0.3 
$ 5.6 
- Rollforward of Consolidated Restructuring Accrual (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Dec. 31, 2016
Dec. 31, 2015
Restructuring Reserve [Roll Forward]
 
 
 
 
 
Beginning balance
 
 
 
$ 2.3 
$ 0 
Expenses
3.7 
0.3 
1.6 
0.3 
5.6 
Payments
 
 
 
(2.5)
(3.3)
Ending balance
$ 2.3 
 
 
$ 0.1 
$ 2.3 
Selected Quarterly Financial Data (Unaudited) - Schedule of Quarterly Financial Data (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 214.7 
$ 213.8 
$ 223.1 
$ 217.9 
$ 206.6 
$ 232.7 
$ 278.2 
$ 388.7 
$ 869.5 
$ 1,106.2 
$ 1,674.2 
Gross (Loss) Profit
(44.7)
(6.2)
15.3 
8.5 
9.3 
(12.3)
2.1 
47.1 
(27.1)
46.2 
201.1 
Net (loss) income
(67.0)
(22.2)
(6.6)
(9.7)
(13.8)
(24.5)
(18.1)
11.4 
(105.5)
(45.0)
46.1 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.01 
Diluted (loss) earnings per share (in dollars per share)
$ (1.52)
$ (0.50)
$ (0.15)
$ (0.22)
$ (0.31)
$ (0.55)
$ (0.40)
$ 0.25 
$ (2.39)
$ (1.01)
$ 1.00 
Restructuring charges
 
 
 
 
3.7 
0.3 
1.6 
 
0.3 
5.6 
 
As Reported
 
 
 
 
 
 
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
213.8 
223.1 
217.9 
206.6 
232.7 
278.2 
388.7 
 
1,106.2 
1,674.2 
Gross (Loss) Profit
 
2.5 
10.2 
3.4 
(6.2)
(20.5)
(6.1)
41.6 
 
8.8 
273.8 
Net (loss) income
 
$ (16.6)
$ (10.5)
$ (13.6)
$ (24.2)
$ (30.8)
$ (24.3)
$ 6.9 
 
$ (72.4)
$ 104.4 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share (in dollars per share)
 
$ (0.38)
$ (0.24)
$ (0.31)
$ (0.55)
$ (0.69)
$ (0.54)
$ 0.15 
 
$ (1.63)
$ 2.29 
Diluted (loss) earnings per share (in dollars per share)
 
$ (0.38)
$ (0.24)
$ (0.31)
$ (0.55)
$ (0.69)
$ (0.54)
$ 0.15 
 
$ (1.63)
$ 2.27 
Schedule II - Valuation and Qualifying Accounts - Rollforward of Valuation and Qualifying Accounts (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Allowance for Uncollectible Accounts
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
$ 1.5 
$ 0.2 
$ 0.2 
Charged to Costs and Expenses
0.7 
1.3 
Deductions
(0.1)
Balance at End of Period
2.1 
1.5 
0.2 
Allowance for Surplus and Obsolete Inventory
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
8.4 
2.9 
1.9 
Charged to Costs and Expenses
1.5 
7.2 
1.6 
Deductions
(1.8)
(1.7)
(0.6)
Balance at End of Period
8.1 
8.4 
2.9 
Valuation Allowance on Deferred Tax Assets
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Balance at Beginning of Period
10.2 
11.7 
14.1 
Charged to Costs and Expenses
15.6 
Charged to Other Accounts
Deductions
(1.4)
(1.5)
(2.4)
Balance at End of Period
$ 24.4 
$ 10.2 
$ 11.7